As we are all aware, the global COVID-19 pandemic has created a time of tremendous uncertainty around the world. Our day-to-day routines have been upended, and we are simply doing our best to maintain some semblance of normalcy, while taking precautions to keep ourselves and our loved ones safe and healthy.
For me, as a tax professional with blumshapiro, maintaining that “semblance of normalcy” means working through tax returns and providing financial advice to our clients across Rhode Island and around the region.
Here’s what the local businesses need to know as they navigate this time of crisis.
On March 20, the IRS released Notice 2020-18, which officially postponed the federal tax filing deadline for federal income tax returns to July 15 for any person defined as an “affected taxpayer,” including an individual, a trust, estate, partnership, association, company or corporation, as provided in section 7701(a)(1) of the Code.
This announcement came a few days after the IRS had already extended the tax payment deadline. The relief provided by Notice 2020-18 is available solely for federal income tax payments (including payments of tax on self-employment income) due on April 15 associated with an affected taxpayer’s 2019 tax year, and federal estimated payments (including payments of tax on self-employment income) due on April 15 for an affected taxpayer’s 2020 tax year.
Remember that these deadlines have been postponed, not canceled.
It is important to note that Notice 2020-18 does not provide an extension of time for the payment or deposit of other types of tax, or for the filing of any other federal information return.
This information should be noted:
• Businesses and individuals will not need to file paperwork such as Forms 4868 or 7004 in order to request an extension to file income tax returns that had been due on April 15.
• The period between April 15 and July 15 will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file federal income tax returns or to pay income taxes postponed by the notice. But interest, penalties and additions to tax with respect to postponed tax filings and payments will begin to accrue on July 16.
In regard to Rhode Island tax deadlines, Gov. Gina M. Raimondo said the state will mirror the federal postponements. But state leaders are strongly encouraging taxpayers who have the ability to meet the April 15 filing date to do so.
It’s important to remember that these deadlines have been postponed, not canceled. Businesses that plan to take advantage of the postponement must ensure that they keep up with their normal bookkeeping and back-office policies. You will need to file and pay your taxes come July 15, and it is important that you keep your paperwork in order.
Rhode Island businesses should be aware that, as of March 24, the state had not extended the payment deadline for sales tax, meals and beverage tax, and other levies.
Businesses that are unable to fulfill their payment requirements for these levies may consider their rights under R.I. Regulation 280-RICR-20-00-4, which allows taxpayers to request penalties be abated “where there was no negligence or intentional disregard of the law.”
For businesses in need of resources, the state of Rhode Island has introduced a wide range of initiatives and loan programs to support the business community during the COVID-19 crisis.
Two programs of particular note include:
• SBA loans: Through this program, eligible businesses can receive working capital loans of up to $2 million with interest rates as low as 3.75%. The SBA has an online tool to determine your eligibility, which you can find at https://bit.ly/3dlvQ5j.
• Free technology: The state has partnered with Microsoft to offer six months of free access to Microsoft’s Office365 programs to any business in Rhode Island. Learn more at http://www.doit.ri.gov/covid-19/.
Additional programs and policy changes are expected in the coming days and weeks. In the meantime, stay safe and healthy.
Lynn O’Marra is a tax principal at Blum, Shapiro & Co. P.C., a regional accounting, tax and business advisory firm with offices in Providence.
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