The spread of COVID-19 has upended business routines and governmental functions.
Business, as usual, will be anything but usual, and life as we know it has been paused for at least the next few months. The economic effects of these changes are expected to be severe.
To help ward off a recession, and in response to further expected declines in the equities markets, the Federal Reserve (“the Fed”) took the unprecedented step on Sunday of lowering the target range of the federal funds rate to between zero and 0.25%. It also indicated that it will keep rates at these levels until it is confident the economy has weathered the impact of the pandemic. The Fed also brought back quantitative easing (QE) as it committed to purchase $500 billion of Treasurys and $200 billion of agency-backed MBS.
Lawmakers have also sprung into action- at the Federal level, the House overwhelmingly passed a package of tax cuts for employers offering emergency sick leave. It does not include the payroll tax cut sought by the President, but it does require insurers to cover virus testing and it provides enhanced unemployment benefits and increased food aid for children, among other things. The Senate is expected to pass the bill this week, and a Presidential signature after that is all but certain.
There is also concern about the looming April 15th tax filing deadline for individuals. Lawmakers have called on the IRS to delay the filing and payment requirements for up to 6 months because the IRS has the authority to take such action on its own. Despite some initial reluctance on the part of Treasury Secretary Mnuchin, the President has announced that he will instruct Treasury to allow individuals and businesses that are negatively affected by the coronavirus to defer their tax payments beyond the April 15 deadline. It remains to be seen whether the extension will be a filing extension, a payment extension, or both. But it is now clear that some action will be taken, even if there are some exclusions for certain high-income taxpayers.
At the state level, things are less clear. Many states tend to piggyback off the approach taken by the Federal government, but some are more proactive and have started to formulate their own rules. The AICPA has published a helpful chart listing state guidance related to the coronavirus pandemic.
consult your tax advisor before taking any specific actions.
Please tune in for real-time updates on specific states that have already released updates:
Here at Withum, we have a tech-forward culture that encouraged a mobile workforce long before the pandemic began. We remain committed to our clients and are fully prepared to meet all tax-filing deadlines and to provide the world-class service our clients have come to expect.
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Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
