CORONAVIRUS & RECENT TAX LEGISLATION

All of us have in some way, shape or for form have been adversely affected by the Coronavirus.  While this is not indigenous to cannabis, this is information that may prove to be of great value for you or people you know.

  1. TAX EXTENSIONS

From the Internal Revenue Service:

The Treasury Department and Internal Revenue Service announced that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020.

Taxpayers can also defer federal income tax payments due on April 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed. This deferment applies to all taxpayers, including

  • Individuals- 1040
  •  Trusts and estates 1041
  • Corporations 1120  
  • Fiscal year partnerships, associations and companies with due dates on April 15, 2020 (uncommon)
  • 1st Quarter Estimated taxes
  • Extensions
  • Taxpayers do not need to file any additional forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the July 15 deadline, can request a filing extension by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. Businesses who need additional time must file Form 7004.

However, the due dates for Forms 990-T otherwise due on May 15, and returns that were due on March 16, 2020 (including Forms 1065, 1065-B, 1066, and 1120-S for calendar year taxpayers) have not been postponed. In addition, second quarter estimated taxes are still due on June 15, 2020. 

The relief applies only to income taxes and does not apply to excise, payroll, estate, or gift taxes. It also does not apply to the filing of information returns. 

The IRS urges taxpayers who are due a refund to file as soon as possible. Most tax refunds are still being issued within 21 days.

  1. STIMULUS PAYMENT

Coronavirus Aid, Relief, and Economic Security Act

From the IRS:

The CARES Act includes stimulus payments of $1,200 for each individual and $500 for each dependent child, defined by the child tax credit rules as under age 17.

Individuals with adjusted gross income (AGI) up to $75,000 a year are eligible for the full $1,200 payment. The payment is reduced by $5 for every $100 in income above $75,000. The payment amount is entirely phased out at an AGI of $99,000.

Married filing joint couples with AGIs up to $150,000 a year are eligible for a $2,400 payment. The payment is reduced by $5 for every $100 in income above $150,000. The payment amount is entirely phased out at an AGI of $198,000 (if the taxpayers have no dependent children). Married couples also will receive an additional $500 for every dependent child under 17.

The IRS will deposit the calculated amount directly into your bank account, using the AGI and the bank information on your 2019 tax return. If your 2019 return hasn’t been filed, the IRS will use the AGI and the bank information from your 2018 tax return. If there’s no bank information on the return, the IRS will mail a check.

The IRS says that a direct deposit should be in your bank account in about three weeks. Checks should start arriving in six to eight weeks.

Technically the stimulus rebate is a 2020 refundable tax credit. The payment received in the next few weeks is an IRS advance. If you have less income in 2020 than in 2019 because of layoffs, reduced hours and closed businesses, and your rebate payment was reduced by the income threshold, you’ll receive a credit for the difference on your 2020 return. If for some reason, you receive too much of an advanced payment, you do not have to pay back the excess.

  1. SBA LOANS RELIEF FOR THOSE ADVERSELY AFFECTED BY THE CORONAVIRUS

From the SBA:

The U.S. Small Business Administration is offering designated states and territories low-interest federal disaster loans for working capital to small businesses suffering substantial economic injury as a result of the Coronavirus (COVID-19). Upon a request received from a state’s or territory’s Governor, SBA will issue under its own authority, as provided by the Coronavirus Preparedness and Response Supplemental Appropriations Act that was recently signed by the President, an Economic Injury Disaster Loan declaration

Any such Economic Injury Disaster Loan assistance declaration issued by the SBA makes loans available statewide to small businesses and private, non-profit organizations to help alleviate economic injury caused by the Coronavirus (COVID-19). This will apply to current and future disaster assistance declarations related to Coronavirus.

SBA’s Economic Injury Disaster Loans offer up to $2 million in assistance and can provide vital economic support to small businesses to help overcome the temporary loss of revenue they are experiencing

These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses. The interest rate for non-profits is 2.75%.

Small business owners in all U.S. states and territories are currently eligible to apply for a low-interest loan due to Coronavirus (COVID-19). For more information, you may contact the SBA disaster assistance customer service center at 1-800-659-2955 (TTY: 1-800-877-8339) or e-mail  disastercustomerservice@sba.gov. Applicants are encouraged to apply online for a disaster loan. If you do not have access to a computer or smartphone, you may call 1‐800‐659‐2955 for assistance.