Corona Virus – Tax Updates and Business Resources

Hello everyone, information is critical. So, we are going to do our best to pass along critical and timely information to help you run your businesses in these unique circumstances with an unknown horizon.

This may be a bit lengthy but please try and find the bandwidth to take it in. I would have written less but I didn’t have the time.

Now onto the facts, just the facts:  Dragnet Trailer  – https://www.youtube.com/watch?v=R374Ib2LqQY

Tax Deadlines, payments and extensions…

Treasury Secretary Steven Mnuchin announced yesterday that individuals and corporations can delay their tax payments, related to 2019 income taxes, for 90 days. (April 15th + 90 days  = ~July 15th). This information is coming from a press-conference and we do not yet have formal guidance but the below outlines the common interpretation within the industry (as of right now 12:32pm 3/18):

  • Unprecedented! Extensions have historically been granted for more time to file – not pay.
  • Conversely – this is not an extension of time to file – extensions of returns still need to be processed.
  • Typical penalties are:
    • Failure to file – this is not impacted or mitigated.
    • Failure to pay proper estimated taxes – this is not impacted or mitigated.
    • Failure to pay balance due – this is the only one impacted or mitigated.
  • We expect Massachusetts to follow suit… but not yet confirmed… and they tend to be a bit more ornery with their extension process which requires that 80% of ultimate tax burden has been paid in order for the extension to be valid.
  • The Treasury Secretary did not address 2020 estimated tax payments, payroll taxes or estate and gift taxes.

https://www.journalofaccountancy.com/news/2020/mar/90-day-delay-tax-payment-deadline-coronavirus-23197.html

https://www.aicpa.org/content/dam/aicpa/advocacy/tax/downloadabledocuments/coronavirus-state-filing-relief.pdf

What does that mean for our office and you, our clients…

Business as usual… we have to keep this process going until we have guidance that extensions are being granted automatically and/or the initial “deadline” is pushed back as well.

  • For those clients for which returns are completed and ready to go by the traditional deadline of 4/15 we are advising that if your balance due is “manageable” (you are the judge on that) you go ahead and pay the balance and move on. If we were to think that the Treasury is going to pull this off smoothly and there won’t be notices generated automatically, we would just be kidding ourselves. I can guarantee that paying will be less headache.
  • Now if your balance due is “substantial” (you are the judge on that) taking advantage of the additional time period allowed may make sense. We will proceed to get your return filed and provide you with a voucher to send in your payment when you are ready – obviously before 7/15. We will not be able to pay these balances due electronically – we can and will still file the returns electronically.
  • For clients who go on extension… the same applies. This is really an exercise of cash-flow management.

One item that my crystal ball foretells is that payments are going to get applied to wrong periods… i.e. you pay your balance due in June 2020 for your 2019 return and the IRS applies the payment to your 2020 estimates – following the instructions on the payment forms and putting the requisite information on your check is going to be critical to limiting headaches.

Funding Resources

The SBA is expanding its disaster lending to include COVID-19. Right now, the terms are awesome… $2M, 3.75% on a 30-year amortization. However, not all states and only certain counties have been approved in Mass. I sense all 50 states and all Mass counties will be on there soon. Check this out-

https://www.sba.gov/disaster-assistance/coronavirus-covid-19

Business owners will need to be able to present clean financial statements, including forward-looking budgets. As accountants and business advisors who know a thing or two about debits and credits this is something that we are well suited to assist with.

 Massachusetts has announced economic support for small businesses with a $10 million loan fund to provide financial relief to those that have been affected by COVID-19.

The $10 million Small Business Recovery Loan Fund will provide emergency capital up to $75,000 to Massachusetts-based businesses impacted by COVID-19 with under 50 full- and part-time employees, including nonprofits. Loans are immediately available to eligible businesses with no payments due for the first 6 months. Massachusetts Growth Capital Corporation (MGCC) has capitalized the fund and will administer it.

All processing and funding will take place online through MGCC staff.

How to Apply:

  • Completed applications can be sent via email to mgcc@massgcc.com with the subject line “2020 Small Business Recovery Loan Fund”.

Loan Fund Details:

  • Who Qualifies: Open to Massachusetts-based businesses impacted by COVID-19 with under 50 full- and part-time employees, including nonprofits (negative impact must be verifiable).
  • This fund is being offered with no payments due for the first 6 months, then 30-months of principal and interest payments and no prepayment penalties.
  • Businesses can apply for loans up to $75,000.

Employment Resources

The Executive Office of Labor and Workforce Development offers resources for businesses related to employee benefits and will post additional guidance as it becomes available.

Programs include:

Updated information regarding unemployment resources can be found here >

The WorkShare program, a tool to help employers avoid layoffs during a downturn. Read more about WorkShare here >

The Rapid Response program, which works closely with companies to avert layoffs and keep a skilled workforce engaged in the existing regional economy or industry. Read more about how the Rapid Response Team can help businesses >

We’ve been here before and Parting Thoughts

With the stock markets rocking and rolling with unprecedented swings it is easy to believe that we are in uncharted waters. The below chart shows the interplay of previous outbreaks and how the markets reacted and rebounded.

Source: https://www.capitalgroup.com/advisor/insights/articles/how-stay-calm-when-markets-stumble.html?cid=sm_og_li_sf_cap_ci_5212711

 

Marcus Aurelius, the Roman Emperor, a philosopher king, reigned during the period of Antonine Plague – which had a mortality rate of 2%-3% and ultimately over 10 million deaths attributed to it – wrote in his journal:

“To bear in mind constantly that all of this has happened before and will happen again—the same plot from beginning to end, the identical staging. Produce them in your mind, as you know them from experience or from history … All just the same. Only the people different.”

Be good to each other, that was the prevailing belief of Marcus’s life. A disease like the plague, “can only threaten your life,” he said in Meditations, but evil, selfishness, pride, hypocrisy, fear—these things “attack our humanity.”

Which is why we must use this terrible crisis as an opportunity to learn, to remember the core virtues that Marcus Aurelius tried to live by: Humility. Kindness. Service. Wisdom. We can’t waste time. We can’t take people or things or our health for granted.

Be well and stay healthy, SPM

Leave a Comment

Do NOT follow this link or you will be banned from the site!