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Regulation and Compliance > Federal Regulation > IRS

3 New Coronavirus Tax Benefits for Businesses

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The Internal Revenue Service is reminding businesses that they can take advantage of three new tax benefits in light of the coronavirus relief.

First, the deadlines to file and pay federal income taxes have been extended to July 15. A FAQ  is available here.

Also available is the Employee Retention Credit, a refundable tax credit against certain employment taxes equal to 50% of the qualified wages an eligible employer pays to employees after March 12, 2020, and before Jan. 1, 2021.

Businesses can get immediate access to the credit by reducing the employment tax deposits they are otherwise required to make, the IRS explains. Also, if a business’ employment tax deposits are not sufficient to cover the credit, they may get an advance payment from the IRS.

All employers regardless of size, including tax-exempt organizations, qualify for the credit except state and local governments and their instrumentalities and small businesses who take small-business loans.

Qualifying employers must fall into one of two categories: The employer’s business is fully or partially suspended by government order due to COVID-19 during the calendar quarter; or the employer’s gross receipts are below 50% of the comparable quarter in 2019. Once the employer’s gross receipts rise above 80% of a comparable quarter in 2019, they no longer qualify after the end of that quarter.

The last credit is included in the Families First Coronavirus Response Act, signed into law by President Donald Trump on March 18.

The law gives all American businesses with fewer than 500 employees funds to provide employees with paid leave, either for the employee’s own health needs or to care for family members, the IRS explains.

For instance, for COVID-19 related reasons, employees receive up to 80 hours of paid sick leave and expanded paid child care leave when employees’ children’s schools are closed or child care providers are unavailable.