Who is Impacted
Anyone making payments of U.S. source fixed, determinable annual, or periodical income to non-U.S. persons will be interested in staying connected with updates from the Internal Revenue Service, The Treasury Department and the OECD to find new and changing information as a result of COVID-19.
In the last two weeks, the Internal Revenue Service (IRS) posted the following changes.
Watch out for scammers. The IRS has identified a number of schemes, whereby scammers are attempting to trick taxpayers, specifically retirees. They use terms like ‘Stimulus Check’ or ‘Stimulus Payment.’ The IRS and government will not use these terms. Instead they refer to the payment as an ‘economic impact payment.’ The IRS will never ask the taxpayer to sign over this payment, nor will they ask for verification of personal or banking information in order to expedite the payment. In the event you encounter a scammer, please report the information to email@example.com.
Employee Retention Credit. On March 31, 2020, the the Treasury Department (Treasury) and the IRS launched the Employee Retention Credit to encourage businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by COVID-19.
Economic Impact Payment. On March 30, 2020, the Treasury the IRS announced that economic impact payments will begin being distributed in the next three weeks and will be distributed automatically, with no action required for most people. It is important to note that taxpayers who typically do not file returns must submit a simple tax return in order to receive the economic impact payment.
FATCA Filing Extension. On March 30, the IRS announced that it will provide an extension of time for a Reporting Model 2 FFI or a Participating FFI to file the FATCA Report (Form 8966). The filing deadline for the FATCA Report will be extended from March 31, 2020 to July 15, 2020. Form 8809-I, Application for Extension of Time to File FATCA Form 8966, will not be required for this extension.
IRS People First Initiative. On March 25, 2020, the IRS announced a number of changes to help people adjust to the challenges of COVID-19, including:
Field, Office, and Correspondence Audits. Generally, IRS will not start new field, office, and correspondence examinations during this period. They will work to refund claims where possible and without in-person contact. In order to protect the government's interest in preserving the applicable statute of limitations, we may see the IRS start new examinations.
In-Person Meetings. There will be no in-person meetings. The IRS will continue their examinations remotely. If able, taxpayers should continue responding to requests from the IRS for information.
Unique Situations. The IRS may work with taxpayers if they have a strong desire to begin an examination while people and records are available and respective staffs have capacity, so long as it is in the best interest of both parties and with the understanding that circumstances could change.
General Requests for Information. If possible, taxpayers should continue to respond to any other IRS correspondence requesting additional documentation during this time.
Earned Income Tax Credit and Wage Verification Reviews. Taxpayers have until July 15, 2020, to respond to the IRS verifying their income or that they qualify for the Earned Income Tax Credit. The IRS will not deny these credits for a failure to provide requested information until July 15, 2020.
Statute of Limitations. The IRS will continue to protect all applicable statutes of limitations on behalf of the government. Taxpayers should cooperate and take action to extend these statutes where expirations might be jeopardized during this period. For statutory periods not set to expire during 2020, the IRS likely will not pursue these actions until at least July 15, 2020.
Extension of Filing and Payment Deadlines. On March 21, the Treasury and IRS announced additional extensions and relief. Estimated tax payments due on April 15, 2020, will not be due until July 15, 2020.
Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. You will automatically avoid interest and penalties on the taxes paid by July 15. Further, penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. Taxpayer that pay taxes by July 15, 2020, will avoid interest and penalties.
This relief applies only to federal income returns and tax, including tax on self-employment income. It does not apply to state tax payments or deposits or payments of any other type of federal tax. Taxpayers still must need to file income tax returns in 42 states plus the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. Be sure to review the information available regarding state tax rules here: https://www.taxadmin.org/state-tax-agencies.
Extended Filing Deadlines. On March 20, the Treasury and IRS announced that the federal income tax filing due date is automatically extended from April 15, 2020, to July 15, 2020. This relief is automatic, taxpayers do not need to file any additional forms or call the IRS to qualify.
For all other updates and additional information please visit the following links:
The Department of Treasury:
The U.S. Government:
https://www.usa.gov/coronavirus (In English)
https://www.usa.gov/espanol/coronavirus (In Spanish)
Update on OECD Tax Work:
Center for Disease Control (CDC):
How to Implement
Visit these websites often to stay informed of changes, both tax and health related!
Comply would like everyone to stay safe in this period of uncertainty, we can beat this together.