The Secretary of Treasury Selects April 1 as the Effective Date for purposes of the Tax Credits under the Families First Coronavirus Response Act; Deadlines with respect to Federal Gift Tax and Generation-Skipping Transfer Tax Deferred Until July 15, 2020

Seyfarth Synopsis: The tax credits afforded to certain employers and self-employed individuals by the Families First Coronavirus Response Act (FFCRA) are in effect for the period from April 1, 2020 to December 31, 2020. In addition, to provide relief to taxpayers affected by the 2019 Coronavirus disease (“COVID-19”), the U.S. Treasury Department and Internal Revenue Service postponed the April 15, 2020 due date for filing United States gift and generation-skipping transfer tax returns and paying federal gift or generation-skipping transfer taxes until July 15, 2020.

The U.S. Treasury Department and Internal Revenue Service announced on March 27, 2020 that The Secretary of Treasury selected April 1, 2020 as the effective date for purposes of the tax credits afforded by the FFCRA.  Accordingly, the refundable tax credits apply to qualified sick leave wages and qualified family and medical leave wages paid for the period from April 1, 2020 to December 31 2020.  Additionally, the self-employment tax credit provided by the FFCRA is determined based on days occurring during the period beginning on April 1, 2020, and ending on December 31, 2020.

In addition, following issuance by the President of the United States of an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act, the U.S. Treasury Department and Internal Revenue Service issued updated guidance on March 27, 2020, providing for automatic postponement of the April 15, 2020 due date for filing United States gift and generation-skipping transfer tax returns and paying federal gift or generation-skipping transfer taxes until July 15, 2020, without incurring any interest, penalty, or addition to tax for failure to file the postponed United States gift and generation-skipping transfer tax returns or pay the postponed federal gift or generation-skipping transfer taxes.  No formal extension form is required to be filed.

The March 27, 2020 guidance amplifies previous guidance issued on March 20, 2020 that postponed the due dates for filing federal income tax returns and paying federal income taxes.

Links:

• Notice 2020-21 https://www.irs.gov/pub/irs-drop/n-20-21.pdf
• Notice 2020-20 https://www.irs.gov/pub/irs-drop/n-20-20.pdf