Tax Relief Measures Implemented in COVID-19 Pandemic

March 26, 2020

As the coronavirus (COVID-19) has led to significant economic challenges to both industry and individuals, the federal and various local governments have taken steps to provide tax relief. The relief measures adopted so far include the following:

  • The due date for filing federal income tax returns is automatically extended from April 15, 2020, to July 15, 2020, and taxpayers can defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest.
  • The New York State Budget Director has announced publicly that the due date for filing New York State income tax returns is automatically extended from April 15, 2020, to July 15, 2020.  We are awaiting formal confirmation of this extension.
  • For New York sales tax filers, penalties and interest may be waived for quarterly and annual filers who were unable to file or pay on time due to COVID-19.
  • Penalties will be waived on late filings relating to NYC Real Property Transfer Tax returns that would be due between March 15 and April 25, 2020. Interest on late payments will not be waived.
  • The New Jersey Assembly has passed legislation that would automatically extend the time to file New Jersey income tax returns until June 30, 2020, but as of the publication of this alert, the legislation has not been signed into law.
  • Employers with fewer than 500 employees are entitled to refundable payroll tax credit for sick and family leave wages paid to certain employees. 
    • To trigger the credits for sick leave wages paid, the wages must be paid to employees that are under a federal isolation order, self-quarantine at the advice of a health care professional, or experiencing COVID-19 symptoms and seeking a medical diagnosis. 
    • To trigger the credits for family leave wages paid, the wages must be paid to an employee who is caring for family members affected by the virus, including children whose schools are closed or whose care provider is unavailable, or who has certain other similar obligations. 
    • Credits are available for payments for up to ten days of wages paid per employee per quarter, with a maximum credit of up to $511 per day for wages paid to employees on sick leave and up to $200 per day for wages paid to employees caring for affected family members. 
  • Additional federal economic stimulus legislation is expected to be enacted shortly. We expect that any such legislation would include additional federal tax relief measures, and we are monitoring its details and progress closely.

As of now, there have been no extensions of the other deadlines applicable to transactions such as like-kind exchanges under Section 1031 of the Internal Revenue Code, or the re-investment of gains in Qualified Opportunity Funds. We will inform you of any changes in these rules as we learn of them.

Please contact us if you would discuss the application of these measures to you. As the landscape continues to change quickly, Herrick continues to provide uninterrupted service to our clients to monitoring all relevant developments, including those stemming from the coronavirus (COVID-19) pandemic.

For more information on this issue or other tax matters, please contact:

Louis Tuchman at +1 212 592 1490 or [email protected]

© 2020 Herrick, Feinstein LLP. This information is provided to keep clients and interested parties informed of legal developments that may affect or interest them. The information is not intended as legal advice or legal opinion and should not be construed as such.