Updated as of March 20th, 2020; the Treasury Secretary has announced that individuals and corporations are able to delay their tax payments for 90-days due to the Coronavirus (COVID-19) pandemic. We understand that people have a lot of questions as to how this change would apply to them so we figured that it would be really impactful for us to break this information down for everyone.
At a high-level, Individuals & C Corporations can now defer tax payments (no limit) for 90 days from the April 15th deadline. So during that time, the IRS will not assess penalties or interest.
Here are a few questions that we’ve had come in so far, and note that we are treating this as a living blog as the economic stimulus package and the tax incentives are actively changing:
1. Is the filing of my tax return still due on April 15th?
- As of 3/20, Treasury has announced that the personal tax return filing deadline has changed and is now July 15th.
- No additional forms will need to be filed to qualify for this automatic extension and payment relief.
2. Does the WHO Pandemic affect the extended deadline?
- For now, there is no change to the extension filing process or deadlines. The extended tax filing deadline for S Corps and Partnerships are still September 15th, and the extended tax filing deadline for personal tax returns is still October 15th.
3. What if I live in Georgia, New York or Alabama, do I get the 90-day relief on state taxes as well?
- With most things in multi-state tax, it’s up to the individual states to determine their treatment, but we believe that most states will follow the Federal recommendations.
- For example, Georgia: "The GSCPA (The Georgia Society of CPAs) announced that they are in touch with DOR (Department of Revenue) commissioner. His intent and understanding are that Georgia will piggyback off of whatever the federal government does. So, at this point, we have nothing official until the IRS does."
4. If my tax return is extended will I still owe interest and penalties for late payments?
- Typically the answer is Yes, but here again this 90 relief provision should kick in. Note that if you make a payment after the 90-day window has closed then interest, and penalties will likely kick in. Of course, a lot could change with this.
5. What about penalties for the underpayment of estimated taxes for 2020?
- This part has been revised as of the afternoon of 3/18. The underpayment penalties for the 4/15 deadline will follow the 90-day guidance as well.
Tax planning note:
- An important note on estimated tax payments is that it is our belief that cash flow comes first in an economic cycle like this. Our preference for this quarter and the next are to hesitate to pay any quarterly estimated tax payments; even if underpayment penalties were to be charged over the coming 90 days. Let’s think about this as entrepreneurs; we still have to pay employees, contractors, rent, ongoing software costs, internet, telephone, etc., etc. in order to be able to continue to deliver our products and services to our clients.
- Once we pay in those estimated taxes, the IRS will not lend those funds back to us. Thus, my preference today is to keep that cash on hand.
6. Is there a website I can go to get updates?
Yes, please note that information is slow coming
Personal extensions: https://www.irs.gov/pub/irs-pdf/f4868.pdf
Business extensions: https://www.irs.gov/pub/irs-pdf/f7004.pdf
IRS's coronavirus FAQ site: https://www.irs.gov/coronavirus
7. I am (a) self employed, and (b) caring for our daughter who’s school has been cancelled. Is that something that will / can be included in our 2019 filing that you’re working on?
- As of now, it appears it can't be included in the 2019 tax filing. It'll likely be a 2020 filing.
- Helpful link:
8. SBA loans - is Georgia an eligible Disaster area?
- Yes, link below:
Notes on proposed SBA loans:
The Senate is currently negotiating a Stimulus Bill that will significantly expand the benefits of this SBA Loan outlined below.
- As proposed, the Bill allocates $350 billion for SBA loans designed to help small businesses (fewer than 500 employees) impacted by the crisis.
- The Bill allows small businesses to take out loans to cover payroll for employees and provides tax-free loan forgiveness for payroll for employees making up to $100,000. Employers can potentially avoid laying off employees if they obtain this loan, since the loan could be forgiven at no cost to the employer.
- To be eligible for the loan, the employer must maintain an average monthly number of employees during the covered period (March 1st to June 30th) that is no less than the number it had before the crisis began. The Bill allows employers who have laid off employees to potentially qualify for forgiveness if they rehire those employees by April 1st, 2020.
- We will send out a separate e-mail once the Stimulus Bill has been passed.
Previously announced SBA Disaster Loan program:
- Loans up to $2 million with a 3.75% fixed rate for 30 years
- Loans may be used to pay fixed debts, cover payroll, address accounts payable and other bills incurred during the crisis
- More information on the SBA’s Disaster Assistance Program here
- Apply directly with the SBA here
8. Business continuity loans - is the city of Atlanta also providing financial support?
- Yes, link below:
Notes from Invest Atlanta:
Invest Atlanta have created a zero-interest Business Continuity Loan Fund (BCLF) with $1.5 million in funding from the City of Atlanta to help local businesses through these tough economic times. The fund may be used to address a lack of working capital and cash flows as a result of reduced consumer demand, the ability to fulfill product or service orders and other economic conditions. Loans are paid back monthly over a term not to exceed five (5) years at an interest rate of 0% with a 6 to 12-month deferment before the first payment is due.
The BCLF program is for businesses operating in the city limits for Atlanta. To be a qualified applicant for the BCLF, businesses must:
- Be an existing for-profit corporation, partnership, sole proprietorship or non-profit with for-profit activities in the city of Atlanta that contributes to trade.
- Be current on all financial obligations related to the lease or mortgage agreement for the business.
- Have 50 or fewer full-time employees, i.e., employees working at least 30 hours per week or 130 hours per month.
- Have been in operation for 1 year
- Have a current City of Atlanta business license.
- Be current on all city of Atlanta taxes and fees.
This blog article is not intended to be the rendering of legal, accounting, tax advice or other professional services. Articles are based on current or proposed tax rules at the time they are written and older posts are not updated for tax rule changes. We expressly disclaim all liability in regard to actions taken or not taken based on the contents of this blog as well as the use or interpretation of this information. Information provided on this website is not all-inclusive and such information should not be relied upon as being all-inclusive.