Tax Day Extension and Families First Coronavirus Response Act
Patrick & Raines Tax Update904-396-5400 ♦ Office@CPAsite.comWhen we rang in the New Year 2020, everything seemed so neat, even and balanced. Then shortly after Valentine’s Day, we began to realize that this might not be as great a year as we had thought. Now as we approach the end of the first quarter, we are surrounded by uncertainty.Almost daily we have been seeing new announcements and new legislation being offered by both Congress and the Internal Revenue Service (IRS). In an effort to cut to the basic facts of those events, we are providing a brief summary of the initiatives to help those needing to file tax returns and those facing employment hardships for both businesses and their employees. The massive $2 trillion Congressional relief bill is on a path for enactment this month. More info will be coming after its passage and rules released for its implementation.The Internal Revenue Service (IRS) has launched a new webpage at www.irs.gov/coronavirus, to provide up-to-date information.In compliance with the stay-at-home orders issued, we are accepting your tax documents by mail, scan and email, fax or drop-off. We are open for business with limited staff and welcome your questions regarding your tax returns. All of our staff is working on a modified business model throughout this busy time. Consequently, we may take a bit longer to respond to your phone calls and emails but we will respond as soon as possible.We look forward to seeing you all healthy and safe in the coming weeks and months. We urge you to comply with all announced safe habits by maintaining a safe distance, practicing responsible personal hygiene, and contacting your health professional if needed.Mark R. Patrick, CPA Timothy P. Raines, CPATax Season ExtendedPursuant to an announcement by Secretary of the Treasury, Steven Mnuchin, the Internal Revenue Service (IRS) has extended the due date for both tax returns and any tax liabilities due. Any amounts due will not be subject to interest, penalties, or additions to tax as long as they are paid by July 15, 2020.The IRS has also extended the time to pay the first quarter estimated taxes, normally due by April 15th. Those payments have also been extended to July 15, 2020 and will not be subject to interest and/or penalty.This relief applies to all tax returns which includes individual (Form 1040), trust and/or estate (Form 1041), partnership (Form 1065), association (Form 990), and company or corporation (Forms 1120 and 1120-S). The forms to request an extension of time to file are not required to get the benefit of this automatic filing (and payment) extension.If an additional extension of time to file is required beyond the due date of July 15, 2020 then Forms 4868 (for individuals) or 7004 (for business returns) must be filed to receive the extension of time to file until October 15th for individuals and corporations and September 15th forS-corporations, partnerships and trusts/estate tax returns.Under these provisions, the date for contributions to your IRA or HSA has also been extended to July 15, 2020. The date for the June 15th estimated tax payment has not changed. Required minimum distributions (RMDs) for those who delayed their first distribution must be withdrawn by April 1st (no change).Find more details at: https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answersFamilies First Coronavirus Response ActTwo (2) major provisions of the legislation were signed into law on March 18th: the Emergency Paid Sick Leave Act and Emergency Family and Medical Leave Expansion Act. Employers with fewer than 500 employees are subject to this Act which is totally funded by the U.S. government. The provisions of the new law will be effective through December 31, 2020. No unused portion of this provision will carryover to 2021 and no benefits are due on separation of service.Under the Act, a total of 12-weeks of paid leave may be available. The first two weeks would be provided by the Emergency Paid Sick Leave Act based on certain criteria and the subsequent ten (10) weeks would be covered by the Emergency Family and Medical Leave Expansion Act (EFMLEA). They are not reliant upon each other and employees may qualify for the EFMLEA without a COVID-19 diagnosis, but the first ten (10) days would be unpaid under these provisions. An employer may still provide benefits, or may be able to pay benefits based on available vacation or personal time off (PTO).Emergency Paid Sick Leave Act (E-PSL)Full and part-time employees who are unable to work or telework for reasons related to COVID-19 (the coronavirus) will be eligible for up to 80 hours of additional emergency paid sick leave regardless of how long they have worked for an employer. Six (6) different scenarios determine the maximum amount of payment:
For individuals subject to a quarantine or isolation order related to the COVID-19, the pay is the greater of the regular rate or the applicable minimum wage, and capped at $511 per day for a maximum benefit of $5,110. Part-time employees’ pay would be based on the average hours worked over the last six (6) months, or hours normally scheduled if employment is for less than six (6) months.
If an employee has been advised by a health care provider to self-quarantine due to COVID-19 concerns, the pay is the greater of the regular rate or the applicable minimum wage, and capped at $511 per day for a maximum benefit of $5,110. Part-time employees’ pay would be based on the average hours worked over the last six (6) months, or hours normally scheduled if employment is for less than six (6) months.
If someone chooses to obtain a medical diagnosis because of experiencing systems of COVID-19 (such as cough, fever, tiredness, or difficulty breathing in severe cases), the pay is the greater of the regular rate or the applicable minimum wage, and capped at $511 per day for a maximum benefit of $5,110. Part-time employees’ pay would be based on the average hours worked over the last six (6) months, or hours normally scheduled if employment is for less than six (6) months.
If an employee is caring for or assisting another individual who is subject to an order (described in 1 or 2 above) then the pay is at two-thirds (2/3) of the greater of the employee’s regular rate or applicable minimum wage but capped at $200 per day for a maximum benefit of $2,000.
If a parent is caring for their child because of school or daycare closure, or because the childcare provider is unavailable due to COVID-19, then the pay is at two-thirds (2/3) of the greater of the employee’s regular rate or applicable minimum wage but capped at $200 per day for a maximum benefit of $2,000.
For employees experiencing any other substantially similar condition specified by Human Health Services, the pay is at two-thirds (2/3) of the greater of the employees’ regular rate or applicable minimum wage but capped at $200 per day for a maximum benefit of $2,000. This provision has not yet been fully defined and we are still not sure what would qualify.
As a condition of the Act, the employer may not require the employee to find a replacement to cover his/her scheduled hours. Employees may first use their own accumulated sick pay; however, the employer cannot require anyone to do so. These laws are effective for employers of fewer than 500 employees, and those with fewer than 50 employees have some options to elect out.Emergency Family and Medical Leave Expansion Act (EFMLEA)This provision is generally available to employees with at least 30 days of employment (whereas the E-PSL is available even if only employed one (1) day). There is only one qualifying criteria for this provision:If someone is unable to work or telework due to a need to care for a child under the age of 18 because the school or childcare provider is closed as a result of a COVID-19 restrictions announced by government authority.The first 10 days of leave may be unpaid (unless qualified under the E-PSL provisions) or if the employee elects to use their accumulated vacation or PTO days. The EFMLEA is an additional extension of time after the first 10 days, for a maximum of ten (10) weeks. The amount of the leave pay is limited to $200 per day with a maximum of $10,000.Other ProvisionsThere were other provisions of the Act which are administered at the state level and you should monitor your state’s actions to provide the following:
Expanded food assistance
Expanded unemployment benefits
Healthcare plans, including high deductible health plans, to provide for COVID-19 testing at no cost to the person
ConclusionThere are many initiatives and programs in process that are still being finalized by the Administration, the IRS and the states. We continue to wait for guidance how the application of the new law will be administered. The efforts of our governmental support will continue to evolve. This summary is based on the best information available at the time of its editing. As always, contact Patrick & Raines, CPAs if you have any questions about these provisions or other tax related event.
