Saturday March 28, 2020
Coronavirus Rebate Checks Proposed
As the number of U.S. coronavirus cases continues to climb and one-fifth of the nation is now sheltering at home, Congress is planning to enact a third relief bill. The coronavirus stimulus bill is under discussion and Senate leaders hope to pass it the week of March 23.
Treasury Secretary Steven Mnuchin spoke to reporters this week and stated that the bill will be very expensive. He noted, "This is a big number. This is a very unique situation in this economy."
While negotiations are still in process, checks to individuals may be distributed as early as April 2020. The cost of the stimulus bill could reach $1 trillion.
Sen. Chuck Grassley (R–IA) is leading the Senate panel drafting the specific provisions. Grassley noted, "We are now working on a bold and comprehensive effort to provide additional relief to Americans and our economy in this challenging time."
Speaking on the Senate floor on March 19, Grassley explained multiple benefits that are under discussion for the new coronavirus relief bill.
Families First Coronavirus Response Act
On March 18, Congress and the President enacted the Families First Coronavirus Response Act (H.R. 6201). The bill is designed to provide tax credits for small and medium-sized businesses. These tax credits will fund paid sick leave and family and medical leave.
Tax Filing and Payments Delayed
On March 13, 2020, the President issued an emergency order and authorized the Secretary of the Treasury to "provide relief from tax deadlines to Americans who have been adversely affected by the COVID–19 emergency."
Treasury Secretary Steven Mnuchin responded by publishing Notice 2020-17 and changing the required tax payments date from April 15 to July 15, 2020.
After the Notice was published, several Senators and Representatives received communications from constituents who are tax preparers. As these tax preparers pointed out, taxpayers will be confused by having a requirement to file on April 15, but permission to defer payment of taxes until July 15, 2020.
On March 19, 2020, House Ways and Means Chairman Richard Neal (D–MA) sent a letter to Secretary Mnuchin and asked for both the filing and tax payment deadlines to be July 15, 2020. Neal stated, "Although Treasury's decision provided welcome relief for the federal income tax payment deadline, I believe that taxpayers require additional relief. I respectfully request that you immediately defer the deadline for all filing and tax payment obligations until July 15, 2020."
Sen. John Thune (R-SD) and Sen. Chuck Grassley (R-IA) also indicated their forthcoming coronavirus stimulus bill will require both filing and tax payments to be due on July 15, 2020.
On March 20, 2020, Sec. Mnuchin stated that both the filing date and payment of taxes will be deferred until July 15, 2020. The estimated amount of taxes that will be deferred for this period is $300 billion.
Editor's Note: The filing relief does have limits. It excludes high–income corporations and individuals. Corporations with tax payments over $10 million and individuals with tax payments over $1 million must still file and pay by April 15, 2020.
Applicable Federal Rate of 1.2% for April -- Rev. Rul. 2020-9; 2020-15 IRB 1 (18 Mar 2020)
The IRS has announced the Applicable Federal Rate (AFR) for April of 2020. The AFR under Section 7520 for the month of April is 1.2%. The rates for March of 1.8% or February of 2.2% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2020, pooled income funds in existence less than three tax years must use a 2.2% deemed rate of return.
Published March 20, 2020