COVID-19 pandemic prompts many tax changes: Taxpayers have a variety of relief measures to help them through the economic disruption caused by the public health crisis.

• Author: Nevius, Alistair M.

Legislative and administrative responses to the COV1D-19 pandemic have given America's taxpayers many short-term--and a few longer-term--tax breaks. From tax credits to filing postponements, here is a breakdown of the changes benefiting individuals and businesses.

Filing and payment postponements

The change affecting the most taxpayers was the postponement of the April 15 filing and payment deadline for affected taxpayers--who were defined as any "individual, a trust, estate, partnership, association, company or corporation" with a federal income tax return or income tax payment due on April 15 (Notice 2020-18). Any affected taxpayer received an automatic postponement of the April 15 deadline until July 15 without having to file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income 'Tax Return, or Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns.

Under Notice 2020-18, no interest, penalty, or addition to tax for failure to file a federal income tax return or to pay federal income taxes will accrue between April 15, 2020, and July 15, 2020, for any return or payment postponed by the notice. The Notice 2020-18 postponement applies only to federal income tax returns and payments (including self-employment tax payments) due April 15, 2020, for 2019 tax years, and to estimated income tax payments due April 15, 2020, for 2020 tax years. The payment and filing postponement was later expanded to include federal gift and generation-skipping transfer tax payments and returns in Notice 2020-20.

The IRS addressed many questions around the filing and payment postponements by posting online FAQs on March 24 (available at tinyurl.com/s2wfh2u).

One key piece of information in the FAQs was that taxpayers who want a filing extension past July 15 have until July 15 to request an extension until Oct. 15.

Another was that second-quarter estimated tax payments are still due June 15, 2020, even though first-quarter estimated tax payments are not due until July 15.

The FAQs also clarified that the April 15 deadline for making 2019 IRA contributions has been postponed to July 15. Other deferred deadlines, according to the FAQs, include the deadline for paying the Sec. 72(t) additional 10% tax on certain distributions from an IRA or retirement plan and the Sec. 404(a)(6) grace period for employers to make 2019 contributions to qualified retirement plans.

However, the deadline for removing excess deferrals out of a retirement plan remained April 15.

Payroll tax credits

On March 18, Congress passed and President Donald Trump signed into law the Families First Coronavirus Response Act, P.L. 116-127, which was a general relief bill, but included among its many provisions are several tax credits for employers who provide paid sick leave or family or medical leave for their employees who miss work for various coronavirus-related reasons.

Payroll tax credit for required paid family leave

Subject to certain limitations, the act provides an employer payroll tax credit that equals 100% of the qualified family leave wages paid by the employer under the portion of the act known as the Emergency Family and Medical Leave Expansion Act (Division C of the act). The Emergency Family and Medical Leave Expansion Act requires employers with fewer than 500 employees to provide public health emergency leave under the Family and...