FEDERAL TAX UPDATE
U.S. Treasury Acts to Defer Certain Tax Liabilities
On Tuesday March 17, Secretary of the Treasury Mnuchin announced that the President has authorized the following actions relating to tax returns for 2019:
- Individuals with taxes due on April 15 can defer on a penalty free and interest free basis balances due up to $1 million for a 90-day period of time. Secretary Mnuchin indicated that no application for such a deferral is necessary. The IRS will automatically waive the appropriate amounts of interest and penalties.
- Corporations will qualify for the same relief in amounts up to $10 million.
It is critical to note that, as of this writing, there will NOT be any extension of time to file granted automatically. A taxpayer must file a tax return or presumably an extension, by April 15.
There are several unanswered questions that may be cleared up in a few days such as:
- Does this relief apply to first quarter 2020 estimated taxes due on April 15?
- How does the relief apply, if at all, to an individual taxpayer that owes $1.2M?
- Does this relief apply to trusts and estates?
- Does this relief apply to gift and estate taxes?
- Will related Corporations be required to share the $10 million amount?
Coronavirus Tax Relief Act
The House passed this bill on Saturday but the Senate has yet to vote on it.
The bill requires employers to pay up to two weeks salaries for medical leave and continue health care benefits until June and receive a credit on their payroll taxes in order to pay for this. Self-employed taxpayers will receive similar credits on their Self Employment tax.
The provisions of the bill are likely to change once the Senate takes it up.
As we get more clarity on these issues and other tax provisions that are enacted, we will pass that information on as quickly as possible.
Citrin Cooperman’s Federal Tax Policy Team
Citrin Cooperman’s Federal Tax Policy Team (FTPT) will continue to keep our clients abreast of the constantly changing legislative and political landscape. This team will examine new tax legislation as it is enacted, in order to identify strategies to help our clients best manage the complexities of their tax situations. Should you have any questions, please do not hesitate to reach out to our team at FederalTaxPolicyTeam@citrincooperman.com.
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