Extension of Federal and State Deadlines:
The IRS recently published an updated Questions and Answers page related to the new deadline extensions for paying federal income taxes and filing federal income tax returns. These FAQ’s provide helpful information and details and can be found here.
The Utah State Tax Commission has confirmed that individuals and fiduciaries will have the same automatic extension (to July 15, 2020) to file and pay their 2019 taxes otherwise due April 15, 2020 and the same relief provided for their federal taxes and returns, with no action required by taxpayers.
Corporate and pass-through tax returns by statute are due April 15, 2020 for calendar year taxpayers, but the Tax Commission will waive interest and penalties if taxes are paid and returns filed for these entities on or before July 15, 2020. No action is required to benefit from these extensions. Individuals, corporations and pass-through entities can still take advantage of the normal filing extensions (6 months for individuals, fiduciaries and corporations and 5 months for pass-through entities), as long as the extensions are requested before filing deadlines. At this time, the deadlines for sales tax returns and payments has not as yet been changed.
Extension of Federal Tax Payment Deadline:
In response to the COVID-19 outbreak, the Treasury Department and Internal Revenue Service have extended the deadlines to file federal income tax returns and pay federal income taxes which were otherwise due April 15, 2020 to July 15, 2020. The extensions are applied automatically, with no taxpayer action required, to all individuals and entities, and there is no limitation on the amount of payment that may be postponed. Penalties and interest on unpaid balances will begin to accrue on July 16, 2020. This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020.
No extension is provided for the payment or deposit of any other type of Federal tax, or for the filing of any Federal information return. (Thus, for example, Form 990 series information returns for calendar year exempt organizations are due May 15, 2020, subject to requested extensions). State filing and payment deadlines vary and are not always the same as the federal filing deadline.
State of Utah:
The State of Utah has announced its intention to follow the payment and filing deadlines of the federal government, with details yet to evolve. From the State Tax Commission’s website: “We are waiting to review the official instructions from the IRS to make certain that we align properly with the federal requirements.” Note, however, that the due dates for filing Utah corporate and pass-through entity returns are set by statute, so further clarification regarding those entities may be forthcoming. All scheduled appeal hearings will be held by telephone conference only.
State tax issues, including employer withholding duties, could arise if an employee works from home in a state other than the state where the employer is located. If questions relating to these issues arise, please contact a member of RQN’s Tax Section.
Families First Coronavirus Response Act (“Act”), H.R. 6201:
(This is a general summary of the provisions of the Act. For a more detailed treatment of the Act’s employment law provisions, see this companion piece on our website by Jascha K. Clark).
The Act, among numerous provisions, provides free diagnosis testing for COVID-19, strengthens some unemployment benefit and food programs, increases paid leave in certain circumstances and enacts a new quarterly payroll tax credit effective for 2020.
“Covered employers” (those with fewer than 500 employees) are required to provide two weeks of emergency paid sick leave to employees (or the equivalent of the average number of hours worked over two weeks for part-time employees) if they are unable to work or telework because they are subject to government or medically advised quarantine, seeking medical diagnosis for COVID-19 symptoms, or caring for others who meet these requirements. If the leave is for the employee’s own care, the amount payable is 100 percent of regular pay up to a maximum of $511 per day and a total of $5,110. Employees who provide care to others, including their children home from school closures, are entitled to two-thirds of regular pay up to a maximum of $200 per day and a total of $2,000.
Covered employers are required to provide up to 10 weeks of paid family leave to employees who have been employed for at least 30 calendar days and who are “unable to work (or telework) due to a need for leave to care for a son or daughter under 18 years of age of such employee if the school or place of care has been closed, or the child care provider of such son or daughter is unavailable, due to a public health emergency” related to COVID-19. The amount payable to the employee is two-thirds of regular pay up to a maximum of $200 per day and a total of $10,000
The Act provides covered employers a refundable (for excess credits) payroll tax credit against the employer portion of Social Security taxes of up to 100 percent of qualified paid sick leave wages paid by the employer and 100 percent of qualified family leave wages paid by the employer. This tax credit is available only for wage amounts an employer is required to pay pursuant to the Act. A self-employed individual otherwise qualified to receive paid sick leave or family leave under the Act if the individual were an employee is eligible for the equivalent amount of credit against self-employment tax. Credits are treated as taxable income to the employer, who can also opt out of the tax credit. The Tax Credit provisions of the Act are effective on the date of enactment, March 18, 2020. However, many of the provisions are not applicable until a date selected by the Secretary of the Treasury, not to exceed 15 days from the date of enactment.
Employers should keep detailed documentation of time that employees are absent related to COVID-19, including time taken for virus testing, medical care, and paid sick, family and medical leave, consistent with employee privacy requirements.
This update features selected developments in the law. It should not be relied upon for substantive legal advice.
Bruce L. Olson is a member of the firm’s Tax Planning and Tax Controversies practice group. He advises taxpayers concerning their rights and duties under Utah state law and represents their interests before administrative tribunals and in court. His counsel extends to both profit and nonprofit entities and includes all types of state and local taxes.