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Friday June 5, 2020

updated - June 5, 2020 Friday EDT

Examining the Tax Laws During Coronavirus: What You Need to Know

Apr 22, 2020 04:10 PM EDT | By Staff Reporter
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Examining the Tax Laws During Coronavirus: What You Need to Know
(Photo : pixabay)

The world as we know it has irrevocably changed. The Coronavirus, or COVID-19, has caused an unprecedented global shutdown. Statistics show that on 7 April 2020, circa 95% of all US residents are at home as a consequence of state-wide lockdown orders.

Why?

Succinctly stated, COVID-19 is a virus that causes a potentially life-threatening respiratory illness that spreads by droplet infection from person to person. It is incredibly infectious and has the potential to spread rapidly through a country's population. Consequently, one of the best ways to get this virus under control is to practice social distancing.

The coronavirus and the global economy

Because all non-essential businesses have been shut down and employees either furloughed, or sent home on unpaid leave, the world has been dumped into an economic crisis that is comparable to the 2008 Great Depression. US figures show that "the 22 million jobs created since the Great Depression [were] wiped out in just 4 weeks

All you need to know about tax laws and COVID-19

At this juncture, it is probably a good idea to hire a legal expert who is also a tax expert like the attorneys employed by Philip Stein & Associates. The reason for this is that it is never easy negotiating tax laws of any country. And trying to get through the day to day implications of the current economic downturn caused by the lockdown is challenging enough without having to determine whether which tax laws are relevant to you and your business.

The US federal government has announced specific incentives and stimulus programs in an attempt to shore up the economy. A good example of this is the Coronavirus Aid, Relief, and Economic Security Act (CARES). The US Department of the Treasury describes the aim of this act. In summary, it is designed to provide "fast and direct economic assistance for American workers and families, small businesses, and preserves jobs for American industries."

One of the measures implemented through the CARES act is the refundable payroll tax credit program. In summary, eligible employees may claim a tax credit for an amount equal to 50% of qualified wages paid through the year-end.

Other applicable tax laws that bear relevance in this scenario and are part of the CARES act, include the following:

Qualified leave for employees

This concession is not part of the CARES act. However, it is still relevant to this conversation. In summary, employers with less than 500 employees must provide sick leave pay for employees who are forced to stay at home because of the need to self-quarantine, to care for a child because the care center or school is closed, or if a family member is sick. In return, the employer can claim this money back in the form of a tax credit.

Paycheck protection program

This program is part of the CARES act. And, in summary, the Small Business Administration is permitted to provide guaranteed low-interest loans to qualifying small businesses, NPOs, and self-employed individuals. These loans must be used to pay employee wages. As with all loans, there are tax implications related to this loan.

2019 Tax Returns

The due date for all 2019 tax returns has been extended to 15 July 2020. This proposal is designed to provide tax relief to all taxpayers. And, it has been partnered with additional edicts like extended payment dates, as well as the waiver of interest or penalties on outstanding taxes.

These are federal guidelines, and individual states are not mandated to implement these measures. However, it goes without saying that most states are complying with these measures and are considering implementing additional tax relief programs in addition to these federal guidelines.

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