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Possible Tax Provisions in a Bipartisan Coronavirus Relief Package

 March 12, 2020

Delaying the April 15 filing date – The New York Times has reported that delaying the April 15 filing date is under consideration. While possible, a more likely approach would be for the IRS to announce that it will waive penalties and interest for late filing and payment. This could be done without legislative involvement and would be consistent with the approach taken in other disaster situations. While this could be limited to those taxpayers “affected” by the coronavirus, the limitation would be difficult to enforce and general availability of forgiveness seems more likely.

Employment Tax Holiday – The President has proposed a holiday on the collection and remittance of payroll taxes. The Democrats have raised objections, primarily because relief would be limited to those who continue to be paid and of no benefit to those whose lose the ability to work and, at least with respect to those under the FICA cap, the benefit is not equally shared by all wage classes.

Some form of employment tax holiday would seem likely. Democrats have supported this as a stimulus measure in the past, and it provides relief from what is viewed by most Democrats as a regressive tax. A provision that mirrors the 2-point payroll tax cut that was part of stimulus legislation during the Obama administration is a possibility.

Employment credits – There is going to be a push for a credit equal to a portion of normal salary and wages paid to workers who are sick or required to be quarantined. This stands a good chance of success. A broader proposal to provide credits for continuing salaries and wages for employees who would otherwise be furloughed due to reduced economic activity will be considered, but is less likely to succeed. Employment credits are a likely companion to provisions expected to be urged by Democrats to provide government payments to workers who are not able to draw wages during a period they are sick or quarantined.

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