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Important COVID-19 Updates

Leslie Paull
covid-19

To our LaPorte clients and community:

Below you will find two areas of important information: an update on our LaPorte Offices and Client Care as well as COVID-19 and Tax Alerts.

LaPorte Offices and Client Care:

Based on Louisiana Governor John Bel Edwards’ Stay at Home Order effective at 5 p.m. on March 23rd, all of LaPorte’s offices are closed. While our office in Houston, Texas was not impacted by that order, we anticipate a Stay at Home Order in Harris County on Tuesday, March 24. Therefore, it made sense for us to close our Houston office at the same time as our Louisiana offices. Our understanding from the Louisiana Governors’ clarification is that professional service firms must be closed to the public but can have reduced personnel (under 10) in the office to perform critical functions.

The LaPorte team is still actively working to meet client needs remotely and we are finding this transition quite effective. Please know that you can reach us either through our main office numbers and extensions or through a directory of all personnel including email addresses and phone numbers found on our website under Contact. Directors’ vCards with their contact information can also be found on the Directors Landing Page.

For our tax clients, if you believe that you will be due a refund, we encourage you to work with us to file your return at your earliest convenience. And, for all clients that need to provide us with tax-related or other documents, we encourage the use of Sharefile. Your engagement director or manager can assist in setting that up for you. For those that still prefer to mail us documents, you can still do that also. If you are considering using a courier or personally dropping off your documents to one of our offices, then please reach out in advance to your engagement professional to see if this is a possibility.

Finally, we encourage you to look on our Newsworthy section of our website for updates on our firm, as well as tax or COVID-19 updates.

Please don’t hesitate to reach out to us with any questions. Please stay safe, connected, and let us know if there is any way we can help.

Tax and COVID 19-related Information

Federal

Tax Extension The April 15, 2020, due date for filing federal income tax returns and making federal income tax payments is automatically postponed to July 15, 2020 (IRS Notice 2020-18). Affected taxpayers do not have to file Forms 4868 or 7004 for extensions. The relief the notice provides is available only for federal income tax payments (including payments of tax on self-employment income) and federal income tax returns due on April 15, 2020, for the 2019 tax year, and federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for the 2020 tax year. There are no extensions for the payment or deposit of any other type of federal tax or for the filing of any federal information return.

Families First Coronavirus Response Act On March 18, President Trump signed the Families First Coronavirus Response Act (the “Act”). The Act provides numerous programs and funding for businesses and families in response to the COVID-19 emergency. Important for employers to know is that the Act requires mandatory sick leave for certain employers based on different factors, and it also provides a tax credit to help employers pay for the sick leave.

These new provisions generally apply to any employer with fewer than 500 employees, but the Department of Labor can exempt small businesses with fewer than 50 employees if the paid leave would jeopardize their business.

The employees covered are any employees who have been employed for 30 days. It should be noted that employers are required to give notice of the types of leave listed below, and that the leaves listed below must be used before taking any regular paid time off.

The two types of required sick leave for employers:

  1.  Public Health Emergency Leave (PHEL)– This portion of the bill amends the FMLA so that if an employee is unable to work because that employee must care for their child who is under the age of 18 due to that child’s school or place of care has been suspended due to a COVID-19 emergency, the employer must allow the employee to take time off.
    The employee may take up to two weeks of time off under PHEL. The first 10 days of PHEL time is unpaid job-protected leave. After the first 10 days, the leave becomes paid leave under PHEL. The paid leave amount is no less than two-thirds of the employee’s regular rate of pay based on the employee’s normal work schedule, but is capped at $200 per day and at a total of $10,000 for each employee.

2.  Emergency paid sick leave – under this type of leave, an employer must provide 80 hours of emergency paid sick leave if the employee is:

a.subject to a federal, state or local quarantine or isolation order related to COVID-19;

b.advised by a health care provider to self-quarantine due to COVID-19 concerns;

c.experiencing COVID-19 symptoms and seeking medical diagnosis;

d.caring for an individual subject to a federal, state or local quarantine or isolation order or advised by a health care provider to self-quarantine due to COVID-19 concerns;

e.caring for the employee’s child if the child’s school or place of care is closed or the child’s care provider is unavailable due to public health emergency; or

f.experiencing any other substantially similar condition specified by the Secretary of Health and Human Services in consultation with the Secretary of the Treasury and the Secretary of Labor.

If the individual is unable to work (or telework) because of criteria a through c above, the amount of paid sick leave is 100% of regular compensation up to a maximum amount of $511 per day. For criteria d through f above, the amount of paid sick leave is two-thirds of regular pay with a maximum amount of $200 per day.

3.  Employer tax credits – The paid sick time payroll tax credit can be claimed on a quarterly basis and is equal to 100 percent of the amount of sick leave wages paid under the types of leave listed above. The credit is subject to limitations. The limitation is to $511 per day ($5,110 total – i.e. 10 days of pay) if an employee is taking time off to care for themselves or $200 per day ($2,000 total – again pay for 10 days) if the sick leave is to care for an individual who is themselves quarantined or showing symptoms of COVID-19 or a minor child whose school is closed. The credit may be refundable if it exceeds the amount the employer owes in payroll tax.

If an employer pays family leave wages under the Act, a different payroll tax provision allows a 100 percent credit against the employer’s share of the payroll tax for each employee, limited to $200 per day, or a total of $10,000 per employee. The credit may be refundable if it exceeds the amount the employer owes in payroll tax. The credit is taxable in that the Act requires that employers increase their gross income for the taxable year by the amount of payroll credit received. Also, any wages considered in determining the payroll credit can’t be used in determining the amount of credit related to paid family and medical leave.

More relief to come As of the time of drafting this update, the Senate is preparing the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. This bill contains many economic provisions for individuals and business owners – including payments to individuals who meet certain requirements, the loosening of the definition of small business for purposes of SBA loans, and various tax incentives for businesses For more details about the CARES Act, please visit the Tax Foundation website.

Louisiana State Relief

  • Louisiana extended the due date for all income and franchise tax returns and tax payments to July 15, 2020. This includes returns and payments for the following:
    • Partnership
      • IT-565-2019 Partnership Return of Income
      • R-6922-2019 Composite Partnership Tax Return
    • Individual
      • IT-540-2019 LA Resident Income Tax Return
      • IT-540B-2019 LA Nonresident and Part-Year Resident Income Tax Return
      • R-1035-LA Consumer Use Tax Return
    • Fiduciary
      • IT-541-2019 Fiduciary Income Tax Return
    • Corporation
      • CIFT-620-2019 Corporation Income and 2020 Franchise Tax

If a taxpayer needs additional time to file a return, the taxpayer must file for an extension by July 15, 2020. For individual, fiduciary, and partnership returns, an extension filed by July 15 extends the date to file the return to November 15, 2020. For corporations, the due date would be December 15. There is no extension for payment beyond July 15, 2020.

  • As of today, 2020 estimated payments are still due April 15 for state taxes.
  • Sales tax returns and payments as well as beer and wine excise taxes and payment originally due March 20, 2020 have been extended to May 20, 2020. The extension is automatic. Orleans Parish has likewise extended the due date by 60 days and has extended the renewal period for ABO licenses up to 30 days.
  • All requirements to electronically file or pay are temporarily suspended.
  • Any taxpayer who intends to elect to treat a pass through entity as a corporation for state income tax purposes as provided in Act 442 of the 2019 Legislature must still make such election on or before April 15, 2020; however, the Secretary may waive any penalty for late filing due to reasonable cause. She has not indicated that the coronavirus is reasonable cause yet.
  • Workers’ compensation returns due between April 1 and April 30 are still due but the taxes are extended to June 30, 2020.
  • All legal deadlines have been suspended until at least April 13, 2020. Any prescriptive period due to expire before that is extended to at least April 13.
  • The Louisiana Department of Revenue (LDR) is temporarily suspending collection actions.
  • Taxpayers may still visit the LDR in person but are encouraged to go online.

Texas State Relief

  • Texas restaurants are requesting similar relief in their state.
  • As with Louisiana, Texas has encouraged taxpayers to use online resources rather than go in person to the Texas Comptroller’s Office.
  • Texas has not yet released specific details on state relief. LaPorte will update you as Texas guidance is released.

We recognize both federal and state tax guidance is rapidly evolving and somewhat confusing. We encourage you to contact your LaPorte tax professional to better understand how these changes affect your unique situation.