COVID-19 Tax and Financial Updates 03-27-2020

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There have been a lot of tax and financial announcements due to the COVID-19 pandemic. Here are some highlights of updates as of this writing:

Tax Updates

  • Tax deadlines: The Treasury Secretary announce that the tax deadline for all businesses and individuals is delayed from April 15th to July 15th. Additionally, they will be able to make payments without interest or penalties. This also applies to the first quarter 2020 estimated income tax payment that is due on 4/15/20, however it does not postpone the second quarter estimated tax payment due on 6/15/20. Yes, that is strange, but we are living in unique times. IRA contributions for the year 2019 can be made until 7/15/20. So far, there isn’t any news from the State of NJ.
  • Existing Installment Agreements: For taxpayers under an existing IRS installment agreement, payments due between April 1 and July 15, 2020 are suspended. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Deposit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances.

Families First Coronavirus Response Act: Employee Paid Leave Rights

Generally, the Act provides that employees of covered employers are eligible for:

  • Two weeks (up to 80 hours) of paid sick leave at the employee’s regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; or
  • Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee’s regular rate of pay because the employee is unable to work because of a bona fide need to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or to care for a child (under 18 years of age) whose school or child care provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition as specified by the Secretary of Health and Human Services, in consultation with the Secretaries of the Treasury and Labor; and
  • Up to an additional 10 weeks of paid expanded family and medical leave at two thirds the employee’s regular rate of pay where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or child care provider is closed or unavailable for reasons related to COVID-19.

Covered Employers: The paid sick leave and expanded family and medical leave provisions of the FFCRA apply to certain public employers, and private employers with fewer than 500 employees.

Eligible Employees: All employees of covered employers are eligible for two weeks of paid sick time for specified reasons related to COVID-19. Employees employed for at least 30 days are eligible for up to an additional 10 weeks of paid family leave to care for a child under certain circumstances related to COVID-19.

Qualifying Reasons for Leave: Under the FFCRA, an employee qualifies for paid sick time if the employee is unable to work (or unable to telework) due to a need for leave because the employee:

  1. is subject to a Federal, State, or local quarantine or isolation order related to COVID-19;
  2. has been advised by a health care provider to self-quarantine related to COVID-19;
  3. is experiencing COVID-19 symptoms and is seeking a medical diagnosis;
  4. is caring for an individual subject to an order described in (1) or self-quarantine as described in (2);
  5. is caring for a child whose school or place of care is closed (or child care provider is unavailable) for reasons related to COVID-19; or
  6. is experiencing any other substantially-similar condition specified by the Secretary of Health and Human Services, in consultation with the Secretaries of Labor and

Important points for employers:

  • The effective date of the Families First Coronavirus Response Act is April 1, 2020 through December 31, 2020.
  • The law is intended to be neutral for employers. Employer pays benefits and recovers the cost of such leave through a refundable, dollar-for-dollar payroll tax credit (up to certain dollar limits)
  • Employer receives 100% reimbursement for paid leave and certain health insurance costs, but
  • the amount is includible in income
  • Paid leave itself is exempt from employment taxes, and if the employer continues the employee’s health insurance coverage while he/she is out on leave, then the credit is grossed up to cover this additional expense

SBA Loans

The SBA is offering low-interest loans of up to $2 million with a low interest rate of 3.75% and long repayment terms. The SBA is waiving the “credit elsewhere” clause. The process should take 2 to 3 weeks and the website to go to is:

https://disasterloan.sba.gov/ela

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