Type: Law Bulletins
Date: 03/19/2020

IRS Provides Tax Payment Extension; Congress Passes Bill Providing Employer Tax Credits for Sick Leave Payments to Employees

Tax Payment and Filing Extension

The IRS has revised its previous announcement to now permit taxpayers to delay any income tax payments due April 15 for 90 days (thus, until July 15) without interest or penalties. The payment extension applies to income tax and self-employment tax payments owed on 2019 income tax returns and first quarter 2020 estimated tax payments without limitation (the original notice contained limitations on the amounts that could be deferred). Nothing needs to be filed to take advantage of the payment extension.  Similarly, the filing deadline for 2019 tax returns has been extended from April 15 to July 15 without the need to file an extension request.

Employer Tax Credits for Sick Leave Payments. 

Pursuant to the sick leave legislation passed by Congress and sent to the President for approval on Wednesday, March 18, a tax credit is provided to employers for wages paid for sick leave covered by the legislation. The amount of the credit is capped at $511 of wages per day paid to each employee to care for themselves and capped at $200 of wages per day paid to each employee to care for a family member or child if their school is closed. Additionally, the credit is generally limited to 10 days of wages per employee. The credit is applied to the employer portion of the 6.2% Social Security Tax and is refundable if it exceeds the amount the employer pays in such payroll tax. The legislation provides a similar tax credit for self-employed individuals against the self-employment tax.

The Tax practice at Taft continues to closely monitor tax developments arising from the COVID-19 emergency. Contact any member of the practice regarding these developments and for additional tax insights.

Please visit our COVID-19 Toolkit for all of Taft’s updates on the coronavirus.

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