On March 19, 2020, Senate Republicans released a draft bill intended to start the discussion with Senate Democrats on Phase 3 coronavirus legislation. The bill includes a lot of significant tax and non-tax provisions for individuals and businesses.
Let’s start with a summary of some of the more significant provisions affecting businesses.
- Provides loans to employers to cover payroll, and the loans are forgivable in a tax-free manner in certain circumstances.
- Delays the due date for estimated tax payments of corporations to October 15, 2020. [This is in addition to IRS Notice 2020-18, issued March 20th, that provides for a filing and payment extension to July 15, 2020 for 2019 income taxes and 2020 estimated income taxes due April 15, 2020.]
- Delays the payment of certain employer and self-employment payroll taxes.
- Temporarily eliminates the 80% income limitation on the use of NOLs and provides for a 5-year carryback of certain NOLs.
- Accelerates the refundability of AMT credits for C corporations.
- Temporarily expands the ability to deduct interest payments by limiting section 163(j) to 50% (from 30%) of adjusted taxable income. [Separately, the proposed section 163(j) regulations have cleared OIRA review, so the final the proposed section 163(j) regulations should be issued shortly.]
- Makes a number of technical corrections to provisions of the TCJA, including qualified improvement property, NOL effective date, adjusting the downward attribution rules for CFC purposes, and a change to section 965 (addressing repatriation).
contact your Withum advisor or a member of Withum’s Tax Services Group.
Now for a summary of some of the more significant provisions affecting individuals.
- Provides rebates of up to $1,200 for single filers and $2,400 for joint filers, with $500 increases for each child. Phase-outs start at AGIs of $75,000 for single filers and $150,000 for joint filers.
- Delays estimated tax payments to October 15, 2020.
- Waives certain early withdrawal penalties for coronavirus-related withdrawals from qualified retirement plans.
- Allows up to $300 of charitable deductions for taxpayers taking the standard deduction for tax years beginning in 2020, and relaxes the limitation on taxpayers who itemize.
Once again, these provisions represent a Republican “wish list” and they do not include the priorities of Senate Democrats. We will monitor developments and keep you posted.