Small and mid-sized businesses are feeling the brunt of the COVID-19 pandemic as large swaths of the economy start to shut down and customers become increasingly afraid to leave their homes.
Understanding the importance of the small business community, the federal government is looking at ways to help ailing businesses make it through this tough time.
Tax relief is one area in which the government can help businesses, but there are several different proposals being considered. Below, we'll look at what's already in place for small businesses and what might be coming soon.
Done: More time for 2019 income tax payments
Small and mid-sized businesses can already take advantage of the U.S. Treasury's decision to push back the deadline for 2019 income tax payments by 90 days.
The move applies both to individual and corporate income taxes, so you'll be eligible for the tax break regardless of whether your business is structured as a sole proprietorship, limited liability company, partnership, S corporation, or C corporation.
No interest or penalties will be due for 90 days on up to $1 million in tax payments for individuals and $10 million for corporations. That should be enough to cover just about any small and mid-sized business, but at least so far, the provision applies only to 2019 tax liability.
Unlikely for now: Payroll tax relief
For a while, it looked as though the Trump administration would push for a temporary payroll tax holiday. The idea behind the measure was to make workers' paychecks bigger, freeing up more cash to help support the economy.
Small businesses would also potentially have benefited, because as employers, they're responsible for paying an equal share of Social Security and Medicare payroll taxes from their own accounts.
The political tide has largely turned away from a payroll tax holiday and toward direct cash payments to individuals. That's bad news for small business, although White House officials have suggested that they might turn back to payroll tax relief in the future.
Uncertain: Delays in paying taxes for 2020 taxes
The Treasury's delay of 2019 income tax payments didn't directly address the related issue of taxes for the 2020 tax year. First-quarter estimated income tax installments are due on April 15, and businesses are responsible for remitting payroll taxes on a regular basis throughout the year.
Some discussions of tax relief for businesses opened the door to a potential interest-free and penalty-free period for these 2020 tax payments, in a manner similar to what the IRS is already allowing for 2019.
Delaying payment would be a lot less expensive for the government than offering a complete tax holiday, and it would provide small business employers with more flexibility in handling their finances during this tough time.
Keep your eyes on Washington
Lawmakers are taking the coronavirus very seriously, especially as its potential impacts on the economy become more widely spread. With small businesses in crisis, you can expect the government to keep looking at measures to offer some financial relief.
Unfortunately, some businesses won’t be able to wait for the lengthy process of getting legislation in place to help them to grind slowly forward.