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A Succinct Summary of the Key Tax Provisions

CavalryOn March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (colloquially, the “CARES Act” or the “Act”).  The CARES Act is a historic $2.2 trillion relief package enacted by lawmakers in the wake of the COVID-19 pandemic.  The Act is more than 880 pages in length and contains a multitude of provisions, all of which are intended to support individuals and businesses during these horrific times.

We have attempted to provide our readers with a broad overview of the most significant tax provisions of the Act.  If a provision is potentially applicable to a given situation, please read the entire provision of the Act to affirm its application.

Piggy bankOn March 13, 2020, President Trump issued an emergency declaration that, in part, instructed the U.S. Department of the Treasury (“Treasury”) to provide taxpayers with “relief from tax deadlines” due to the impact of the Coronavirus. 

Code Section 7508A gives Treasury authority to postpone the time to perform certain acts required under the Code for taxpayers affected by a federally declared disaster (as defined in Code Section 165(i)(5)(A)). 

The Secretary of the Treasury determined that any person with a federal income tax return and income tax payment due on April 15, 2020 is affected by the COVID-19 emergency.  Accordingly, as previously reported in our blog posts covering Notice 2020-17 and Notice 2020-18, Treasury postponed the due date for the filing of federal income tax returns and the payment of federal income taxes due on April 15, 2020 to July 15, 2020. 

Treasury has expanded taxpayer relief with the announcement of Notice 2020-20.

CautionYesterday, like other commentators, we reported that, in accordance with its terms, the Families First Coronavirus Response Act (“Act”) is effective on April 2, 2020.  Please be aware, the U.S. Department of Labor (“DOL”) posted on its website a statement that the Act is effective on April 1, 2020.  We assume this is not a premature April Fool’s joke.  Accordingly, since DOL is the agency enforcing the non-tax aspects of the Act, we advise employers to ready themselves for the new law one day earlier than expected.  It is better to be safe than sorry!    

U.S. FlagToday, in the wake of the recent decision by the Internal Revenue Service (“IRS”) to extend the income tax filing and payment deadlines to July 15, 2020, it announced a new taxpayer-friendly program called the “People First Initiative” (the “PFI”).  The PFI is designed to provide taxpayers with additional relief from the havoc wreaked by COVID-19.

IRS Commissioner Chuck Rettig stated that the PFI is part of the Service’s “extraordinary steps to help the people of our country.”  It is a temporary initiative.  Unless extended, the PFI will be available to taxpayers from April 1, 2020 to July 15, 2020 (“Program Period”). 

The temporary relief offered by the PFI includes postponing Installment Agreement and Offer in Compromise payments, and halting many collection and enforcement actions.  During the Program Period, the IRS will provide needed guidance.

FamilyPresident Trump signed the Families First Coronavirus Response Act (the “Act”) on March 18, 2020.  The Act becomes effective April 2, 2020, and contains a number of tax provisions that fund the Act’s mandatory paid leave provisions. 

This blog post summarizes the Act’s paid leave and associated employer tax-related benefits.  The Act is broad in application, creating complexity.  In general, it applies to employers with fewer than 500 employees.  We have attempted to dissect the Act in bite-sized, easily understandable chunks, removing the complexities whenever possible.

NewspapersYesterday, I reported that the U.S. Department of the Treasury (“Treasury”) issued Notice 2020-17, extending the due date for payment of federal income taxes from April 15, 2020 to July 15, 2020, because of the impact of the COVID-19 pandemic.  After some feedback from the tax community, Treasury has now restated and expanded the relief provided by Notice 2020-17.  

In accordance with Notice 2020-18, not only is the due date for payment of federal income taxes extended to July 15, 2020, but the date for filing federal income tax returns originally due on April 15 is now extended to July 15, 2020.

Notice 2020-18 supersedes and expands Notice 2020-17 in many helpful ways:

U.S. TreasuryOn March 13, 2020, President Trump issued an emergency declaration, which in part instructed the U.S. Department of the Treasury (“Treasury”) to provide taxpayers with “relief from tax deadlines” due to the impact of the Coronavirus.  In response, Treasury issued Notice 2020-17 (which will be published in IRB 2020-15, dated April 6, 2020).

Code Section 7508A gives Treasury authority to postpone the time to perform certain acts required under the Code for taxpayers affected by a federally declared disaster (as defined in Code Section 165(i)(5)(A)).  

IRSWith data breaches becoming a common event throughout the world, the Internal Revenue Service (“IRS”) has been undertaking a number of initiatives aimed at enhancing its security of taxpayer information and preventing the filing of fraudulent tax returns by taxpayer impersonators.  Many of these initiatives are invisible to the public.

The IRS has joined forces with state taxing agencies, tax professionals, software developers and financial institutions to form the “Security Summit.”  This coalition is organized into six working groups, namely:

sailboat in stormAs we reported in our June 4 blog post, Oregon lawmakers had recently enacted a “corporate activity tax” (“CAT”) that applies to certain Oregon businesses. The new law, absent challenge, becomes effective January 1, 2020.

We also recently reported that a prominent group of Oregon businesses planned to challenge the CAT. It appears, however, that the momentum for a challenge has recently died.

In this blog post, we discuss the reasons causing the death of the challenge. In addition, we cover some technical changes in the new law that are currently awaiting Governor Kate Brown’s signature.

Capitol in Salem, OregonWe are taking a break from our multi-post coverage of Opportunity Zones to address a recent, significant piece of Oregon tax legislation. 

On May 16, 2019, Governor Kate Brown signed into law legislation imposing a new “corporate activity tax” (“CAT”) on certain Oregon businesses.  The new law expressly provides that the tax revenue generated from the legislation will be used to fund public school education. 

Although the new tax is called a “corporate” activity tax, it is imposed on individuals, corporations, and numerous other business entities.  The CAT applies for tax years beginning on or after January 1, 2020. 

To help defray the expected increased costs of goods and services purchased from taxpayers subject to the CAT that will assuredly be passed along to consumers, the Oregon Legislative Assembly modestly reduced personal income tax rates at the lower income brackets.

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Larry J. Brant
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Larry J. Brant is a Shareholder in Foster Garvey, a law firm based out of the Pacific Northwest, with offices in Seattle, Washington; Portland, Oregon; Washington, D.C.; New York, New York, Spokane, Washington; and Beijing, China. Mr. Brant practices in the Portland office. His practice focuses on tax, tax controversy and transactions. Mr. Brant is a past Chair of the Oregon State Bar Taxation Section. He was the long-term Chair of the Oregon Tax Institute, and is currently a member of the Board of Directors of the Portland Tax Forum. Mr. Brant has served as an adjunct professor, teaching corporate taxation, at Northwestern School of Law, Lewis and Clark College. He is an Expert Contributor to Thomson Reuters Checkpoint Catalyst. Mr. Brant is a Fellow in the American College of Tax Counsel. He publishes articles on numerous income tax issues, including Taxation of S Corporations, Reasonable Compensation, Circular 230, Worker Classification, IRC § 1031 Exchanges, Choice of Entity, Entity Tax Classification, and State and Local Taxation. Mr. Brant is a frequent lecturer at local, regional and national tax and business conferences for CPAs and attorneys. He was the 2015 Recipient of the Oregon State Bar Tax Section Award of Merit.

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