Coronavirus tax update for businesses

Desroches Partners would like to provide you quick tax and accounting tips for small businesses to consider in the Coronavirus era. These are ideas to ponder today. This pandemic coupled with low oil prices will pinch the Houston economy. If you haven’t already discussed these issues with your tax preparer, please do so soon. We are here and happy to help if you want to discuss these issues further.

1) Deferred Income Tax Payments
All income tax payments due on April 15th are deferred without interest or penalty 90 days to July 15th up to a limit of $1,000,000 for individual taxpayers and $10,000,000 for corporate taxpayers. The deferral is for both 2019 final income tax payments and 2020 1st quarter estimated tax payments.

2) Federal Filing Deadlines
The federal filing date for Individuals, Corporations, Estates and Trusts has been moved from April 15, 2020 to July 15, 2020. This move was announced on March 20, 2020 by Treasury Sec. Steven Mnuchin.

3) State Deadlines
Each state is making decisions independent of other states. There is no consistent or uniform guidance. Some states have extended filing and payment deadlines for a variety of taxes, others continue to operate as usual. The following link provides a variety of tax updates including a state tax chart AICPA Coronavirus Resource Center.

4) Families First Coronavirus Response Act
First, this act should not be confused with the President’s initiative to get cash to the American people. The focus of this act was primarily sick, medical and family leave and as such it has a host of employment and benefits issues. From a tax perspective you may be eligible to claim payroll tax credits to the extent you are required to pay sick, family or emergency leave create under this act. Self-employed individuals may also be eligible for a credit for qualified sick or family leave equivalent.

5) Future Legislation
The US Government is actively working on subsequent Coronavirus bills with a variety of tax credits and impacts. As these bills are finalized and signed into law, details will follow. Help is coming.

6) Manage Your Cash Flow
There are several different actions as business owners you can take to help better manage your cash flow during this uncertain time. The options available can vary by state and by financial institution. Some actions to consider are:

  1. In this low interest environment, consider drawing on your line of credit to meet immediate cash flow needs.
  2. Consider your vendor invoices, pay all expenses that cannot be delayed such as payroll and delay others to meet your cash flow demands.
  3. Reach out to Bank/Credit card issuers to discuss the best option for your situation.
  4. Reach out to your mortgage lender(s) now for deferral, relief and forbearance options.
  5. Reach out to your landlord now for monthly rent deferral or lease options.
  6. Reach out to the membership subscription to defer or cancel the membership payment.
  7. Reach out to your accountants and have your tax and financial records current as this will facilitate grant and lending options as the programs become available.

We hope you find this information useful. We are here and happy to help if you want to discuss these issues further.

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