March 27, 2020

US tax developments due to COVID-19 – Governments extending payment and/or filing due dates

Due to COVID-19, tax authorities have provided some relief to taxpayers as follows:

US Federal Income Taxes

As you may be aware, the US Treasury Department issued a notice to extend the date that certain payments must be made (https://www.irs.gov/pub/irs-drop/n-20-17.pdf). In addition, an extension for time to file the tax returns has been announced byTreasury Secretary Mnuchin via Twitter earlier today. These are the main provisions that apply to your employees:

• There is an extension of time to pay, and an extension of time to file.
• The due date for the payment of federal income taxes (below $1M) and filing of US federal income tax returns normally due on April 15, 2020 has been extended until July 15, 2020.
• Penalties and interest on any remaining unpaid balance will begin to accrue on July 16, 2020.

US State Income Taxes

State income tax return filing deadline extensions and payment extensions may differ (https://www.aicpa.org/content/dam/aicpa/advocacy/tax/downloadabledocuments/coronavirus-state-filing-relief.pdf).  Currently, for the two most populated states with income taxes:

• CALIFORNIA:  California has pushed its tax filing and payment deadline to July 15, waive interest and late filing and late payment penalties.
• NEW YORK:  “At this time, the New York State Tax Department has not extended the deadline to file personal income tax or other tax returns. We will update this page if new information becomes available.”

Globally

We have seen similar measure from other countries around the globe. For example, the Netherlands, Portugal, and Denmark have issued deferral options of tax payment.

Here is what you can expect from our team:

1. Communication with your Employees:  We are continually in communication with your employees regarding their tax return preparation status and are sending a special alert regarding the above changes
2. Preparation of Tax Returns:  We will continue the preparation of income tax returns as usual. 
3. Extensions:  As always, we will e-file extensions as needed for all tax returns.
4. Federal Tax Balances Owed:  For federal tax balances that are payable by the company (usually for tax equalized or net-pay employees), we will communicate such balances owed as we prepare/finalize tax returns and will allow at least 3 weeks of time for your processing of the payments; this means that we commit to communicate all known balances by June 24^th.
5. US States Balances Owed:  We are monitoring all state filing and payment obligations as they evolve and will request payments and file extensions in accordance with each state’s laws, regulations, and updates.

We are here to help with any other items that you may be facing:

1. Assignments being postponed
2. Employees repatriating early
3. Business travel slow-down
4. Employees working from home, in different tax jurisdictions from where they are paid
5. Employees being displaced and not able to return to their home base