E-News for Payroll Professionals: COVID-19 and more

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Issue Number: 2020-04

Inside This Issue

1. Coronavirus-related paid leave for workers and tax credits for small and midsize businesses
2. IRS delays tax filing and payment deadlines to July 15 for all taxpayers
3. IRS unveils new People First Initiative; COVID-19 effort temporarily adjusts, suspends key compliance programs
4. Coronavirus tax relief information
5. Taxpayer First Act: What we’ve heard from you
6. Certain small employers can request to file employment taxes annually instead of quarterly
7. IRS Outreach Connection – Tax information you can share
8. New forms, instruction and publications on IRS.gov

Small and midsize employers can soon begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees. This COVID-19 relief to employees and small and midsize businesses is provided under the Families First Coronavirus Response Act, signed March 18, 2020.

To take immediate advantage of the paid leave credits, businesses can retain and access funds that they would otherwise pay to the IRS in payroll taxes. If those amounts are not enough to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will soon be released.

Key takeaways:

Paid sick leave for workers

• For COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child care leave when employees' children's schools are closed, or child care providers are unavailable.

Complete coverage

• Employers receive 100% reimbursement for paid leave under the FFCR.
  • Health insurance costs are also included in the credit.
  • Employers face no payroll tax liability.
  • Self-employed individuals receive an equivalent credit.

Fast funds

• Reimbursement will be quick and easy to obtain.
• An immediate dollar-for-dollar tax offset against payroll taxes will be provided.
• Where a refund is owed, the IRS will send the refund as quickly as possible.

Small business protection

• Employers with fewer than 50 employees are eligible for an exemption from the requirements to provide leave to care for a child whose school is closed, or child care is unavailable in cases where the viability of the business is threatened.

Easing compliance

• Requirements subject to 30-day non-enforcement period for good faith compliance efforts.

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The Treasury Department and the IRS are providing special tax filing and payment relief to individuals and businesses in response to the COVID-19 outbreak.

The 2019 income tax filing and payment deadlines for all taxpayers who file and pay their federal income taxes on April 15, 2020, are automatically extended until July 15, 2020. This relief applies to all individual returns, trusts and corporations. This relief is automatic, taxpayers do not need to file any additional forms or call the IRS to qualify.

This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020. First quarter 2020 estimated income tax payments are postponed from April 15 to July 15, 2020. Second quarter 2020 estimated income tax payments are still due on June 15, 2020.

Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. You will automatically avoid interest and penalties on the taxes paid by July 15.

In Notice 2020-18, Relief for taxpayers affected by ongoing COVID-19 pandemic, the Treasury Department and the IRS announced special federal income tax return filing and payment relief in response to the ongoing emergency. Please see the frequently asked questions related to the relief provided in the notice.

These FAQs will be updated periodically and are designed to be a flexible tool to communicate information to taxpayers and payroll professionals in this changing environment. The answers to these questions provide responses to general inquiries and are not citable as legal authority. Accordingly, the Treasury Department and the IRS are continuing to consider additional Internal Revenue Bulletin (IRB) guidance on the issues addressed in these FAQs.

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The IRS announces its People First Initiative to help those facing the challenges of COVID-19 issues. This new initiative is a sweeping series of steps to assist taxpayers by providing relief on a variety of issues ranging from easing payment guidelines to postponing compliance actions.

These new changes include issues ranging from postponing certain payments related to Installment Agreements and Offers in Compromise to collection and limiting certain enforcement actions. The IRS will be temporarily modifying the following activities as soon as possible; the projected start date will be April 1 and the effort will initially run through July 15. During this period, to the maximum extent possible, the IRS will avoid in-person contacts. However, the IRS will continue to take steps where necessary to protect all applicable statutes of limitations.

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To help with the rapidly evolving COVID-19 situation, the IRS created a special Coronavirus Tax Relief page on IRS.gov focused on steps to help payroll professionals, taxpayers, businesses and others affected by the coronavirus. This page will be updated as new information is available.

The Department of Treasury also has information available at Coronavirus: Resources, Updates, and What You Should Know.

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The implementation of the Taxpayer First Act gives the IRS a unique opportunity to make significant improvements in the way the agency serves payroll professionals and taxpayers, and how it continues to enforce the tax laws in a fair and impartial manner.

The TFA Office has been on a “listening tour” gathering ideas and suggestions from stakeholders inside and outside the tax administration universe. If you haven’t shared your comments or ideas on how we can better serve you and your clients, please consider sending your thoughts to TFAO@irs.gov or share them with your regular IRS contact point.

So far, the TFA Office has received and considered thousands of pieces of feedback. We’re continuing to analyze this information and convert it into concepts that will shape the TFA Report to Congress, which we plan to submit later this year. Below is a high-level overview of the feedback received from external and internal sources.

External stakeholder input and feedback from other internal sources are consistently falling into six areas of opportunity:

• Deliver a seamless taxpayer experience
• Expand secure digital communications
• Empower, equip and fully enable employees
• Resolve issues timely and efficiently
• Provide access to information and promote transparency
• Improve services and compliance to promote fairness and help public perception of the IRS

For more information about TFA, visit www.irs.gov/taxpayer-first-act.

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Employers currently required to file Form 941, Employer's QUARTERLY Federal Tax Return, but who believe their tax liability to be $1,000 or less, may be eligible to update their filing requirement to Form 944, Employer's ANNUAL Federal Tax Return.

To request the change, employers can send a written request, postmarked by March 15 or call the IRS at 1-800-829-0115 by April 1. The agency will send a written notice if it accepts the request to change the filing requirement.

Find more information on switching from filing employment taxes quarterly to annually on IRS.gov.

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The IRS’s Outreach Connection is the newest IRS subscription service. It delivers up-to-date materials for payroll professionals.

The material for Outreach Connection is specifically designed so subscribers can easily share it with their clients, employees or partners through email, social media, internal newsletters or external websites.

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New forms

• Form 941, Employer's Quarterly Federal Tax Return
• Form 941 (PR), Employer's Quarterly Federal Tax Return (Puerto Rico Version)
• Form 941-SS, Employer's Quarterly Federal Tax Return - American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands
• Form 5884, Work Opportunity Credit
• Form W-4S, Request for Federal Income Tax Withholding from Sick Pay

New instructions

• Inst 941, Instructions for Form 941, Employer's Quarterly Federal Tax Return
• Inst 941-SS, Instructions for Form 941-SS, Employer's Quarterly Federal Tax Return - American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands

New publications

• Pub 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
• Pub 974, Premium Tax Credit (PTC)
• Pub 4268, Employment Tax for Indian Tribal Governments
• Pub 5137, Fringe Benefit Guide

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