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COVID-19 Updates: Our Response Branch Availability Small Business Assistance FAQs

On Point Market Commentary

April 2020

COVID-19 Government Relief Highlights

While our country battles a public health crisis with social distancing and quarantines, the United States “main street” economy is experiencing an unprecedented period of business disruption. The federal government is rapidly providing ways to mitigate the liquidity issues that are created by the mandated pause in economic activity.  In addition to the trillions in spending forthcoming from the fiscal support packages, the Federal Reserve has cut short-term interest rates essentially to zero and rolled out a litany of programs that will provide trillions of dollars of liquidity to financial markets in order to avert a credit crunch.

Most notably, the Fed has authorized itself to lend up to $4.5 trillion to a new program called the Exchange Stabilization Fund, which the government can use to buy up to $5 trillion of corporate bonds, loans and even corporate bond ETFs. As a result, the Fed’s balance sheet could more than double to $10 trillion or more at full utilization. Furthermore, the Fed has decided to abandon the limit on its purchases of Treasury securities and agency mortgage-backed securities and make them open-ended. These previously-unthinkable figures clearly show the Fed’s commitment to deliver what is needed to keep markets functioning and restore investors’ confidence with shock and awe.

Highlights of the government relief that may be beneficial to you are summarized below. Please contact your South State Wealth team or your legal / tax advisor for a more detailed discussion of the full legislative and administrative actions as it relates to your specific situation.

Treasury Department Extension of Tax Deadlines and Payments

On March 21, 2020, the IRS issued Notice 2020-18 that automatically extended the federal tax filing deadline for any federal income tax return due April 15, 2020 to July 15, 2020. No additional forms need to be filed to qualify for this extension. Please note this automatic extension of the filing deadline does not apply to estate or gift tax returns.

Unlike the typical filing extensions, this relief also applies to federal income tax payments for all taxpayers, including any first quarter estimated tax payments that would have been due April 15, 2020. These payments can be deferred from April 15, 2020 to July 15, 2020 without interest or penalties.  The maximum payment deferral for individuals is $1 million and $10 million for corporations. As of the writing of this article, the second quarter estimated tax payments have not been extended, however, the Treasury Department and the IRS have the authority to change that due date if they deem it appropriate.

If more time to file a federal income tax return is needed beyond July 15, 2020, the taxpayer can request an additional extension as they have in previous tax years.

The Internal Revenue Service has a website with more information, https://www.irs.gov/coronavirusStates:

State filing deadlines are not directly impacted by IRS Notice 2020-18. However, all State Departments of Revenue have offered some relief from the initial payment and filing deadlines. Please check with your tax advisor for the extensions offered in your filing jurisdictions.

Families First Coronavirus Response Act

The Families First Coronavirus Response Act (“FFCRA”) requires certain employers to provide their employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19.  Generally, FFCR provides that employees of covered employers (i.e. certain public employers and private employers with fewer than 500 employees) are eligible for:

Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or child care unavailability if the leave requirements would jeopardize the viability of the business as a going concern.  The Department of Labor’s Wage and Hour Division administers and enforces the new paid leave requirements.  For more information, please see the Department of Labor’s website, https://www.dol.gov/agencies/whd/pandemic.

Covered employers qualify for dollar-for-dollar reimbursement through tax credits for all qualifying wages paid under the FFCRA.  For more information, please see the Department of the Treasury’s website.

The Coronavirus Aid, Relief, and Economic Security Act

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act was signed March 27, 2020. This comprehensive bill is aimed at providing direct support to individuals and businesses impacted by the virus, as well as the economic disruptions.  The Act is historically large both in the length of the text and dollars involved, providing an estimated $2 trillion in assistance. This includes almost $500 billion in individual rebate checks, $500 billion to support businesses and industries impacted by the virus, $400 billion in tax credits to businesses for wages and payroll tax relief, $300 billion to support various state and local governments and $150 billion to support the health care system.

Individual Tax Provisions

Changes to Unemployment Compensation

Business Provisions

Provisions for Real Estate Owners/Investors

 

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