Income Tax Delays and New Employee Leave Mandate

/Income Tax Delays and New Employee Leave Mandate
Income Tax Delays and New Employee Leave Mandate 2020-03-24T13:18:10-05:00

Details regarding the COVID-19 outbreak change by the hour. The government continues to make numerous announcements each day, including many that alter or negate previous announcements. We know that it is confusing and stressful during these uncertain times. SFW Partners, LLC is committed to helping you understand the changes and how they may impact you.

Filing and Payment Date Delay

On March 20, the IRS issued a new notice regarding the April 15 deadline and related payments. This notice superseded the notice it issued two days before and significantly changes details that we sent to you a few days ago. Under the new notice, all taxpayers will have until July 15 to file income tax returns that would have been due on April 15. This is automatic and does not require the filing of an extension. In addition, all 2019 income tax and self-employment tax payments and the first quarter 2020 estimated tax payment that would have been due on April 15 are now due July 15. The delayed filing and payment dates apply to all individuals, trusts, estates, partnerships, and corporations, regardless of the amount owed.

Because the federal due date is now July 15, the deadline for making 2019 IRA and SEP contributions will also move to July 15.

At this time, the second quarter 2020 estimated tax payment continues to be due on June 15 (a month earlier than the first quarter due date).

Many states, including Missouri, have announced that they will follow the federal delay.

Paid Leave and Related Tax Credits

On March 18, President Trump signed the Families First Coronavirus Response Act (FFCRA). This act provides employees with emergency family and medical leave, as well as paid sick leave, and it creates payroll tax credits for affected employers. The Act is effective for leave beginning on April 2.

Unlike many family leave requirements, this one impacts most employers, including very small businesses. The Secretary of Labor has the authority to exempt employers with under 50 employees but only if it would jeopardize the viability of the business. No details have been provided on how that might be proven or how easily the exemption would be granted. This exemption would only apply to the paid family and medical leave and would not apply to the paid sick leave.

Employers are required to post a notice of these requirements in a conspicuous place. The Department of Labor plans to release a model notice by March 25.

Public Health Emergency Leave (Family and Medical Leave)

  • Private employers and nonprofit organizations will be required to provide as many as 12 weeks of job-protected leave to employees that are unable to work or telework due to caring for a child under the age of 18 whose school or place of care is closed. The first 10 days may be unpaid, although a worker may choose to use other accrued leave. After the first 10 days, employers would be required to pay employees two-thirds of their normal wages, not to exceed $200 per day and $10,000 in the aggregate.

Emergency Paid Sick Leave

  • Private employers and nonprofit organizations will be required to provide paid sick leave of two weeks (80 hours) for full-time employees and a pro rata amount for part-time employees. If the leave is due to the employee’s own health issue then these benefits are capped at $511 per day and $5,110 in the aggregate. If the leave is due to needing to care for others then these benefits are capped at $200 per day and $2,000 in the aggregate.
  • To qualify for this two week sick leave, an employee must be under isolation or quarantine or experiencing symptoms and seeking medical diagnosis. In addition, it includes an employee that is caring for a family member under quarantine or experiencing symptoms or a child whose school or care is closed.

Payroll Tax Credits

  • To help employers fund the mandatory leave, two new refundable tax credits have been created. The refundable tax credits are equal to 100% of the qualified family leave wages and paid sick leave, as well as health insurance costs.
  • Self-employed individuals may also be eligible for these credits.
  • The IRS is promising to make reimbursements quick and easy. An immediate dollar-for-dollar offset against taxes will be provided and if a refund is owed, it will be issued as quickly as possible. If the credit amount is not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a form that will be released this week.

In these times of financial uncertainty, our team of trusted advisors stand ready to serve and support you. For example, we can help you analyze cash flow and complete detailed projections. We can assist you in exploring additional financing, including SBA loans for small businesses. We can help you analyze opportunities and threats.

You are not alone during these difficult times. Please do not hesitate to contact us if you need any assistance. Although we are working from home, we are still accessible to you. You can contact your regular SFW representatives via email or phone. You can also call our receptionist at 314-569-3333 or email her at and she will put you in contact with the right person.

SFW Partners, LLC