New directives from IRS and Fed aimed to assist taxpayers and employers

The Federal Reserve and the IRS both announced new initiatives Thursday to boost support to employers and taxpayers.

The Fed announced the Main Street Lending Program that will boost support for small and mid-sized businesses that were in good financial standing before the crisis by offering 4-year loans to companies employing up to 10,000 workers or with revenues of less than $2.5 billion. Principal and interest payments will be deferred for one year.

There are two different loans that can be obtained under the Main Street Lending Program.

The Main Street New Loan Facility is for new loans that originate on or after April 8, 2020. The loan size is limited to the lesser of $25 million, or an amount, when added to the borrower’s existing outstanding and committed but undrawn debt is less than four times the borrowers 2019 EBITDA.

The Main Street Expanded Loan Facility allows banks to increase the size of an outstanding loan to a business issued prior to April 8, 2020, rather than issue a new loan.  These loans are limited to a maximum loan size of $150 million, 30% of the borrower’s existing outstanding and committed but undrawn bank debt, or an amount that, when added to the borrower’s existing outstanding and committed but undrawn bank debt, is not more than six times the borrower’s 2019 EBITDA.

Firms seeking Main Street loans must commit to make reasonable efforts to maintain payroll and retain workers. Borrowers must also follow compensation, stock repurchase, and dividend restrictions that apply to direct loan programs under the CARES Act. Firms that have taken advantage of the PPP may also take out Main Street loans.

Tax filing and payment deadlines adjusted

Taxpayers have more levity in tax filing and payment deadlines as a result of a new IRS decision.

The new IRS Notice 2020-23, which updated Notice 2020-18 (which previously granted filing and payment extension relief), applies to taxpayers who have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020, including individuals, trusts, estates, corporations, and noncorporate tax filers. That period will be disregarded by the IRS in calculating interest, penalties, or addition to tax for failure to file the forms specified in the notice.

There’s no need to file extensions or send documents to the IRS, the notice points out. The relief encompasses forms and their related schedules and attachments.

Here are a few of the additional areas of relief provided under this latest notice:

Estimated taxes: The notice postpones the June 15 deadline for estimated taxes to July 15.

Unclaimed refunds:  Normally, the deadline for filing a 2016 return to claim a refund is April 15.  The deadline is extended to July 15.

Installment payments under Sec. 965(h): Installment payments of the Sec. 965 transition tax due on or after April 1, 2020, and before July 15, 2020, are postponed to July 15, 2020.

American citizens living abroad: Americans who live and work abroad have until July 15, 2020, to file a 2019 federal income tax return and pay any tax due.

IRS acts delayed

The notice also gives the IRS more time to perform its own operations. The IRS is allowing itself an extra 30 days to perform time-sensitive acts due on or after April 6, 2020, and before July 15, 2020. Affected taxpayers include those under examination, those with cases with the Independent Office of Appeals, and those who submit amended returns or submit payments with respect to a tax for which the assessment period would expire on or after April 6, 2020, and before July 15, 2020.

To learn more about these changes and what they might mean to you, reach out to a professional at KraftCPAs. We’ll be happy to answer your questions.

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