Tax Alert: Tax Impacts of Coronavirus

We are writing to keep you informed of the coronavirus’s potential impact on tax legislation and answer any questions that you may have. In his address to the country last evening, the President referenced a deferral on tax payments “without interest or penalties for certain individuals and businesses negatively impacted.” While Trump did not specify who would get a filing extension nor for how long it would remain in effect, it appears likely that it will apply to individuals and “small and medium-sized businesses” based on recent comments by Treasury Secretary Steven Mnuchin and the House Appropriations Committee.

Additionally, last week an $8.3 billion emergency spending package, meant to support state and local health agencies, vaccine and treatment development, and loans for affected small businesses, was enacted into law. While there are no direct tax impacts in this package, we are continuing to monitor how the federal departments allocate the funds for any related tax implications.

Just today House Democrats introduced the “Families First Coronavirus Response Act.” This legislation, which will likely pass the House but faces an uncertain future in the Senate, would provide funding to support domestic nutrition assistance programs (i.e., emergency SNAP assistance), emergency paid sick leave, emergency unemployment benefits, and state spending on the ongoing economic consequences of the pandemic.

Lastly, but most importantly, First Advantage and the National Employment Opportunity Network are working together on a Coronavirus Employee Retention Tax Credit (ERTC), which would be structured like recent disaster relief employee retention tax credits. A coronavirus ERTC would act to encourage paid time off during health related testing or quarantine in a way that has proven successful and administratively feasible in the past. While the ERTC has not yet been included in the bills or packages that have already been introduced, we are hopeful that our work with members of Congress and Committees on the Hill will lead to this type of employer relief coming very soon.

We will continue to keep you informed and encourage you to reach out to your First Advantage Tax Account Consultant, or your company’s tax advisor or legal counsel, to discuss the ongoing tax-related impacts of coronavirus.