News comes fast in the rapidly-changing environment we all currently live in, and the U.S. Department of the Treasury is no exception. Last week, the Treasury and Federal Reserve Board announced the establishment of new lending programs to help businesses and state and local governments affected by the COVID-19 pandemic. Additionally, the Treasury and the IRS issued expanded guidance for tax payment and tax filing deadline extensions.
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Expanded Lending Programs
It’s no secret that small and medium-sized businesses have been some of the hardest hit by the widespread closures resulting from the COVID-19 pandemic. The Department of the Treasury and the Federal Reserve hope to offer these businesses, as well as state and local governments, some assistance by establishing two initiatives: Main Street Lending Program and a Municipal Liquidity Facility.
Main Street Business Lending Program
Businesses with up to 10,000 employees or $2.5 Billion in 2019 annual revenue will be eligible for the low-interest loans offered under this program. Lenders for the Main Street program will be financial institutions, such as large banks, although details of the application process and a list of participating lenders have not been provided at this time. The Treasury announced an additional $75 billion investment in this program bringing the total funds available to $600 billion.
Municipal Liquidity Facility
The Treasury also announced an additional $35 Billion investment in the Municipal Liquidity Facility (MLF). This initiative will provide up to $500 Billion in direct financing to state and local governments to help with the delay of tax receipts due to the extensions of various tax filing and payment deadlines. State and local governments can obtain these funds by selling municipal notes directly to the MLF.
Additional Tax Filing and Payment Deadlines Extended
The Treasury and IRS issued some much-needed guidance on 2020 estimated tax payments as well as extending additional tax deadlines for taxpayers. The main takeaway from this is that most tax filings and payments due between April 1, 2020 and July 15, 2020 have been extended to July 15, 2020.
2020 Estimated Tax Payments
In addition to the already extended first-quarter payments, second-quarter payments have also been extended to July 15, 2020. Prior to this update, the second-quarter estimated tax payment would have been due before the first quarter payment. This chaotic tax payment schedule may have created undue confusion and burden on taxpayers, but fortunately, lawmakers made this correction. The estimated tax payments covered under this provision include Individuals filing 1040-ES series forms, Fiduciaries of Estates and Trusts filing Forms 1041-ES, Corporations filing Forms 1120-W, and Tax Exempt Organizations filing Forms 990-W.
Expansion of Original Due Dates and Applicable Taxpayers
Under previous IRS Notices, deadlines other than April 15, 2020, were not eligible for the July 15, 2020 extension. With this recent update, original filing due dates, as well as previously extended due dates between April 1, 2020 and July 15, 2020, are also granted an automatic extension to July 15, 2020. This relief applies to the tax filing and payment requirements of the following:
- Individual Income Tax Returns – Forms 1040, 1040-SR, 1040-NR, 1040-NR-EZ, 1040-PR, and 1040-SS
- Corporate Income Tax Returns of calendar year or fiscal filers – Forms 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-S, and 1120-SF
- Partnership Income Tax Return of calendar year or fiscal filers – Forms 1065 and 1066
- Estate and Trust Income Tax Returns – Forms 1041, 1041-N, and 1041 QFT
- Estate and Generation-Skipping Transfer Tax Payments and Return Filings – Forms 706, 706-NA, 706-A, 706-QDT, 706-GS(T), 706-GS(D), and 706-GS(D-1)
- United States Estate (and Generation-Skipping Transfer) Tax Returns – Form 706 filed pursuant to Revenue Procedure 2017-34
- Informational Beneficiary Filings – Forms 8971 and supplemental forms
- United States Gift and Generation-Skipping Transfer) Tax Returns – Forms 709
- Estate Tax Payments of principal and interest due as a result of an election made under sections 6166, 6161 or 6163 and annual recertification requirements under section 6166 of the Code
- Return of Organization Exempt from Income Tax – Forms 990, 990-EZ, 990-N, and 990-PF
- Exempt Organization Business Income Tax – Forms 990-T
- Application for Tentative Refund – Form 1045 and Form 1139 (six-month extension as applicable for the carryback of a net operating loss for tax years beginning in 2018 and ending before June 30, 2019).
Other Time-Sensitive Actions
- The statute of limitations was set to expire on April 15, 2020 for filing an amended 2016 income tax return. The IRS provided relief this week and Taxpayers now have until July 15, 2020 to file a claim of refund for the 2016 tax year. The relief also includes the time to file a petition with the tax courts or review of a decision rendered by the tax courts. However, the additional time does not cover any deadlines that expired prior to April 1, 2020.
- The IRS issued a Revenue Procedure (2020-23) which lessens restrictions on certain partnerships looking to amend returns. Certain partnerships which were previously limited in their ability to amend returns (instead having to file Forms 8986 and 8985 with an Administrative Adjustment Request) can now file amended returns. Rev Proc 2020-23 allows affected partnerships to amend returns for 2018 and 2019 and furnish K-1’s before September 30, 2020. This may benefit partnerships by allowing them to take advantage of some of the favorable tax provisions included in the CARES Act, such as a technical correction to the life of Qualified Improvement Property.
- The IRS issued a Revenue Procedure (2020-24) which provides guidance for taxpayers on how net operating losses are carried back under the CARES Act. Specifically Rev. Proc. 2020-24 provides procedures for NOLs arising in tax years beginning after December 31, 2017 and before January 1, 2021. By allowing taxpayers to carry back losses and claim refunds of previously paid taxes, the government is essentially putting extra cash in taxpayers’ pockets during a time when it is needed most.
- Due to limited access to documents and information by both IRS employees and taxpayers, additional time will be granted to persons currently under examination. A 30-day postponement will be granted if the last day of performance is on or after April 6, 2020, and before July 15, 2020.
If you have questions regarding any of these recent updates, please reach out to your Blue & Co. advisor.