An FAQ for Surviving the Financial and Tax Implications of COVID -19

As our country and clients continue to struggle with the changing landscape created by the COVID-19 epidemic, Moskowitz LLP will continue to keep our clients apprised of changes imposed on tax and financial planning by the virus. Below, we’ve put together an FAQ of questions and answers which our clients have been asking us, since the beginning of the outbreak.

My business is shutdown. How can I limit liability?

1) Landlord lease negotiations

A well-crafted lease is the most efficient tool you have as a property owner or business owner to ensure that your investment runs smoothly and without undue liability. Whether you are a long-term landlord or tenant looking to ensure that your existing agreement is up to date with current
law and precedent.

As for Coronavirus relief, Gov. Gavin Newsom has not banned evictions or foreclosures outright. Instead, he issued an executive order last week asking cities and counties to enact such bans. Without overarching statewide action, the response has been a patchwork.

Depending on the state of the language in your lease agreement(s), you may be entitled to relief, or your leases may not even be valid at this point.

If you have questions, the attorneys at Moskowitz LLP have the experience and knowledge you need to ensure that you get the best value for your property and that you are able to take advantage of the state of your Agreement with negotiations related to lease arrears, re-negotiations, and CORONAVIRUS relief.

2). SBA Disaster Loan Application (Preparation of Financial Statements & Tax Returns)

Small businesses, that have been financially impacted as a direct result of the Coronavirus (COVID-19) since Jan. 31, 2020, may qualify for Economic Injury Disaster Loans of up to $2 million to help meet financial obligations and operating expenses which could have been met had the disaster not occurred. The loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the coronavirus crisis.

Moskowitz LLP can assist you in your loan application and prepare necessary financial statements and tax returns as part of your loan application package.

3) Cash Flow Management

A cash crisis is a disaster for businesses. Poor cash flow management is a leading cause of business failure. Your business must be structured to have a positive cash flow if you want your business to grow and increase profits. During a time of economic downturns and emergencies our cash flow management service helps you:

  • To obtain an appropriate line of credit
  • Learn cash collection acceleration techniques
  • Use proven, effective collection policies
  • Use advantageous payment policies
  • Obtain the maximum rate of return on your idle cash

To learn more about how we can help you avoid stressful cash shortages, please call Moskowitz LLP today.

4) Pension Plan Recommendations

Businesses in financial crunches often are not able to make their pension plan contributions, especially during times of emergency. Moskowitz LLP will review your pension requirements and assist you with revising your plan so that you can meet all requirements to maintain tax-deferred status and your duties as an employer.

5) Creditor/Vendor negotiations, Asset Protection & Pre-Bankruptcy Planning

Moskowitz LLP offers creative solutions to troubled businesses and their creditors. We represent troubled businesses, creditors and landlords in all bankruptcy and insolvency contexts, finding the best business outcome for each unique situation, crafting practical solutions that resolve underlying problems.

When are my 2019 tax returns due?

Tax Day is now July 15: Treasury and the IRS have extended filing deadlines and federal tax payments regardless of the amount owed.

Is the Internal Revenue Service working?

On March 25, 2020, The Internal Revenue Service announced its IRS People First Initiative in response to this COVID-19 crisis. These new changes include issues ranging from postponing certain payments related to Installment Agreements and Offers in Compromise to collection and limiting certain enforcement actions. The IRS will be temporarily modifying the following activities as soon as possible; the projected start date will be April 1 and the effort will initially run through July 15. During this period, to the maximum extent possible, the IRS will avoid in-person contacts. However, the IRS will continue to take steps where necessary to protect all applicable statutes of limitations.

More specifics about the implementation of these provisions will be shared soon. Highlights of the key actions in the IRS People First Initiative include:

  • Existing Installment Agreements. For taxpayers under an existing Installment Agreement, payments due between April 1 and July 15, 2020 are suspended. Taxpayers who are currently unable to comply with the terms of an Installment Payment Agreement, including a Direct Deposit Installment Agreement, may suspend payments during this period if they prefer. Furthermore, the IRS will not default any Installment Agreements during this period. By law, interest will continue to accrue on any unpaid balances.
  • Offers in Compromise (OIC). The IRS is taking several steps to assist taxpayers in various stages of the OIC process, including: A) Pending OIC applications: The IRS will allow taxpayers until July 15 to provide requested additional information to support a pending OIC. In addition, the IRS will not close any pending OIC request before July 15, 2020, without the taxpayer’s consent B) OIC Payments: Taxpayers have the option of suspending all payments on accepted OICs until July 15, 2020, although by law interest will continue to accrue on any unpaid balances.
  • New Requests for Installment Payment Agreement or New OIC Applications. Taxpayers are encouraged to submit a request for an Installment Agreement or, if applicable, an OIC during this period.
  • Field Collection Activities: Liens and levies (including any seizures of a personal residence) initiated by field revenue officers will be suspended during this period. However, field revenue officers will continue to pursue high-income non-filers and perform other similar activities where warranted.
  • Passport Debt Certification: The IRS will suspend new certifications to the Department of State for taxpayers who are “seriously delinquent” during this period. Taxpayers are encouraged to submit a request for an Installment Agreement or, if applicable, an OIC during this period. Certification prevents taxpayers from receiving or renewing passports.
  • IRS Requests for Information: In addition to compliance activities and examinations, the IRS encourages taxpayers to respond to any other IRS correspondence requesting additional information during this time if possible.
  • Help for Small Businesses: Please see our prior E-Blast and blog post regarding Resources Available. In addition, the IRS and Labor has announced a plan to implement COVID-19 paid leave for workers and tax credits for small and midsize businesses. U.S. Treasury Department, Internal Revenue Service, and the U.S. Department of Labor recently announced in a March 20 news release that soon, small and midsize employers can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse them, dollar-for-dollar, for the cost of providing coronavirus-related leave to
    their employees. Contact us to learn how to implement this relief.