Steps the IRS is Taking During the Coronavirus Crisis: Small Businesses

The coronavirus pandemic is sending shock waves through the US economy, leaving taxpayers with many questions—especially as we approach traditional tax time. In response to the rapidly evolving crisis over the coronavirus, the IRS has created a website to help taxpayers and small business owners navigate uncertain times.

Businesses with fewer than 500 employees can take advantage of key features:

Paid Leave Reimbursements

In a major, multi-agency move, the US Department of the Treasury, the Internal Revenue Service (IRS), and the US Department of Labor (Labor) have rolled out the news that small and midsize employers can immediately take advantage of two 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.” The coverage goes even further to protect employers.

  • Health insurance costs are also included in the credit.
  • Employers have no payroll tax liability.
  • Self-employed taxpayers receive an equivalent credit.

Employers who support families by allowing for leave to provide childcare while schools and child care facilities are closed may receive a refundable child care leave credit equal to two-thirds of the employee’s regular pay.

Reimbursement Timeline

The dollar-for-dollar tax offset will be provided immediately against payroll taxes. The IRS will send refunds as quickly as possible.

Under-50-Employee Exemption from Family Support

In cases where the viability of the business is threatened, employers with a very small number of employees—fewer than 50—can apply for an exemption from requirements to provide leave to employees whose children’s schools are closed or for whom child care is unavailable.

Non-Enforcement Period for Compliance

The Department of Labor will provide time for employers to come into compliance with these new guidelines. It will not bring any enforcement action against employers who are acting in good faith to try to come into compliance with the act. For the first 30-day period, Labor will focus on compliance assistance rather than legal action against employers during this time.

Tax Filing Date Change

The IRS has changed the 2020 federal tax deadline to July 15. Businesses are not required to file any kind of extension. State tax deadlines will vary by state, but many are looking to extend the deadline as well.

As with everything during this time, the situation is constantly evolving for individuals and small businesses. You should check with your state’s labor departments, as well, to see what they are doing to support small businesses during the coronavirus crisis.