118252 Shaffer Drive, Building B, Littleton CO 80127

COVID-19 pandemic developments

The latest developments on the COVID-19 pandemic as of March 30th, 2020:

  • Beware of Criminals in (Virtual) IRS Clothing. Scams already are underway to defraud individuals slated to receive payments resulting from passage of the CARES Act, the Coronavirus Aid, Relief, and Economic Security Act. Because the intention is, as much as possible, to issue payments via direct deposit and use tax information from 2019 or 2018, phishing is happening via phone calls, text messages, and e-mails. The IRS will not call, text, or email you to verify banking information for stimulus payments. The messaging includes variations such as “in order to receive your/your client’s stimulus payment via direct deposit, we need you to confirm the banking information.” The information may be sought via telephone or directing victims to click on a link to a website where they enter their banking information.

The extension period for filing returns and paying taxes also provides an opportunity for criminals to take advantage of identity theft because there’s an expanded time frame before the real taxpayer files. Criminals may file fraudulent zero balance returns if it’s determined people who don’t normally file need to file a return to receive the stimulus payment. The possibility of criminals filing returns with a low balance due also is likely so that they have a filing record that can be used to allow them access to stimulus funds. A small balance due is worth it for a larger stimulus payment.

Go to https://www.consumer.ftc.gov/blog/2020/03/checks-government to see the Federal Trade Commission information on checks from the government.

  • As we continue to analyze the CARES Act, we have discovered some additional provisions we have not yet discussed that could be very helpful to some of our clients:
    • SBA Loans
      • Banks are encouraged to defer payments and extend the maturities on SBA loans other than those made under the Paycheck Protection Program. This covers loans made under §7(a), §7(m), and Title V.
      • The SBA will also make 6 months of principal, interest, and fee payments on these loans for the 6 months after the deferral period or for loans that aren’t deferred beginning immediately
      • These provisions also apply to new loans made through September 27, 2020.
    • Bankruptcy
      • CARES Act makes some changes easing the bankruptcy process. You may want to consult your lawyer regarding the Bankruptcy Act provisions to gauge the details of those changes.
    • Unemployment Insurance
      • CARES Act extends unemployment insurance to most individuals who were not previously covered by unemployment insurance and are unemployed because of the COVID-19 crisis.
      • Increases unemployment insurance payments by $600 per week.
      • Allows unemployment insurance payments to begin immediately without a waiting period starting with the first week of unemployment.
      • Extends unemployment insurance coverage for an additional 13 weeks
    • Recovery Rebates
      • Provides an individual credit of $1,200 (or $2,400 for married filing joint) plus $500 per qualifying child.
      • Credit to by paid out by IRS during 2020
      • Credit phases out starting at AGI of
        • $150,000 for married joint return taxpayers
        • $75,000 for individual taxpayers
        • $112,500 for head of household
      • Advance payment of credit will be made based on 2019 tax return or if that return has not been filed the 2018 tax return
      • We will need to do further research to determine whether the credit is recaptured if an advance payment is made and the individual does not qualify because of 2020 AGI. We assume that it is subject to recapture with the filing of the 2020 return.
    • Coronavirus Related Adjustments to Qualified Plans
      • Coronavirus Related Adjustments to Qualified Plans
      • Taxpayers who experience adverse financial consequences as a result of the effects of the Coronavirus on their employment can withdraw up to $100,000 from their qualified retirement plans (including IRAs)
      • The income from the distribution is spread into income over three years.
      • The individual has three years to repay the distribution and not be taxed on it.
      • The CARES Act also increases the amount of loans that can be taken from 401(k) plans.
      • The CARES Act waives the required minimum distributions from qualified plans for 2020.
    • Charitable Contributions Changes
      • An individual who does not itemize deductions can deduct up to $300 above the line for charitable contributions.
      • Individuals can deduct charitable contributions up to 100% of their AGI
      • Corporations charitable contribution limitation is adjusted to 25% of income (from 10%)
    • Employer Educational Assistance
      • Allows Educational Assistance Programs of employers to also make payments of principal or interest on qualified education loans incurred by employees for the education of the employee. As long as these payments fall under the other limitations they are not taxable to the employee.
    • AMT Credits for C Corporations
      • Allows C Corporations to receive a refund of all AMT Credits in 2018.
    • Student Loan Provisions
      • CARES Act suspends all payments due for part D and Part B student loans through September 30, 2020
      • No interest accrues on the loans during the suspension
    • Defined Benefit Plans
      • Extends the due date for all required defined benefit plan contributions (including for cash balance plans) for 2020 to January 1, 2021
      • Contribution amounts will need to be increased for interest
    • Home Mortgage Forbearance
      • A borrower with a federally backed mortgage loan who is experiencing a financial hardship due directly or indirect to the COVID-19 emergency can receive a forbearance on the loan. Loans include
        • FHA
        • Freddie Mac
        • Fannie Mae
        • VA
        • Department of Agriculture
        • Guaranteed under section 184 or 184A of the Housing and Community Development Act
        • Insured under section 255 of the National Housing Act
      • The forbearance is for up to 180 days and will be extended for an additional period up to 180 at the request of the borrower
      • During the forbearance period interest only accrues on the loan to the extent that it would accrue if the borrower made all payments on time
      • 30 day forbearance available for loans for multifamily properties with federally backed loans.
        • Two additional 30 day periods can be made at the request of the borrower
        • Owner cannot evict tenants or make additional charges to tenants for nonpayment of rent
        • Owner cannot require a tenant to vacate a dwelling unit while under the forbearance
    • Moratorium on Eviction Filings
      • The lessor of a covered residential property may not evict an tenant for nonpayment of rent or make additional charges for nonpayment of rent during the 120-day period beginning with the date of enactment (3/27/2020)
      • A covered property is on that participates in a covered housing program or has a federally backed mortgage loan

Let us know if you have any questions regarding today’s developments. We will continue to keep you up to date regularly.