As of Saturday morning, 21 March 2020, this is a synopsis of where we are with certain tax issues as they related to COVID-19 as well as some specifics of the Emergency Paid Sick Leave Act. This is not meant to be a comprehensive discussion of the nuances of each government action. If you have specific questions, please feel free to contact me.
Federal Filing Extension
Per IRS Notice 2020-18, the federal government has extended filing and payment due dates for 2019 returns until 15 July 2020. The cap announced earlier in the week ($1 million for individuals and $10 million for corporations) has been removed. This only affects income tax returns, so payroll tax deposits, excise, and other taxes are still due on time.
Kentucky Filing Extension
On Friday, 20 March 2020, Governor Beshear announced that Kentucky income tax returns will be extended to 15 July 2020. More information is expected early next week including further information on payment extensions (which are likely to follow federal guidance). This only affects income taxes, so sales and other taxes are still due on time.
Maryland Filing and Payment Extension
On Tuesday, 17 March 2020, Comptroller Peter Franchot announced that Maryland tax returns and 2019 tax payments will be extended to 15 July 2020. This only affects income taxes, so sales and other taxes are still due on time.
H.R. 6201, the Emergency Paid Sick Leave Act
On Wednesday, 18 March 2020, President Trump signed the Emergency Paid Sick Leave Act. The law has the following components (summarized).
- Government and private employers with fewer than 500 employees are REQUIRED to provide 80 hours of sick leave to employees unable to work due to quarantine or coronavirus sickness at their regular rate of pay.
- This mandatory leave is capped at $511 per day and $5,110 in total.
- Sick leave is also required to be paid at 2/3 the employee’s regular rate of pay (or capped at $200 per day and $2,000 total) to care for another individual affected by coronavirus or required to provide childcare due to school closings.
- Full-time employees are entitled to 80 hours of paid sick leave, and part-time employees are entitled to the average they work over a two-week period.
- Emergency Family and Medical Leave is also REQUIRED after the first 10 days at 2/3 the regular rate of pay and is capped at $200 per day and $10,000 in total.
- The Department of Labor has authority to exempt certain small businesses with fewer than 50 employees if complying would jeopardize the business.
- Refundable tax credits are available for employers equal to the sick leave paid each calendar quarter under the Act. The credits are capped in the same manner as the benefits.
- Both the paid sick and family leave credits are increased to cover amounts paid by employers to cover employee health insurance premiums while the employee is on leave.
- Self-employed individuals can take similar refundable credits against their self-employment taxes.
- The Act takes effect on Thursday, 2 April 2020, and expires on 31 December 2020.
The Department of the Treasury will issue further guidance on effective dates for all provisions of the Act. The employer credits are meant to eliminate the cost of the Act for employers in this challenging time.
May our Lord protect your family and you during this pandemic.