Senate Republicans today announced new legislation that would roll back 2019 return filing dates, provide direct cash payments to taxpayers, and provide loss and expense related relief to businesses. While legislation is moving quickly, no bill can pass without some Democratic support, so it is likely that many of these proposals will change or disappear by the time any final bill is enacted.
Key tax relief provisions of the bill include:
- A delay in the filing and payment deadlines of calendar 2019 1040s, 1041s and C corporation returns to July 15. Returns for fiscal years would be similarly extended to the seventh month after year-end. The deadline relief would not apply to pass-throughs.
- A delay in the due dates of individual and corporation estimated tax payments due through September 2020 to October 15, 2020.
- A delay in payment deadlines for employer share of the 6.2% FICA tax and the Railroad Retirement Act Tier 1 taxes for 2020. These taxes would be due 50% on December 31, 2021 and 50% one year later.
- A five-year carryback of net operating losses arising in 2018, 2019 and 2020, and elimination of the 80% limitation of the amount of taxable income that can be offset by the losses arising in those years.
A retroactive delay in the cap imposed on individual losses. The 2017 TCJA imposed limits on net business loss deductions - $250,000 for individuals and $500,000 for businesses. These rules would be deferred to 2021, allowing refunds to those affected by the limits on their 2018 and 2019 filings.
An increase in the cap on deduction of business interest for 2019 and 2020 to 50% of adjusted taxable income, from the current 30% cap. The proposal would also allow taxpayers to base the 2020 limitation on 2019 taxable income.
A fix for the “retail glitch” to reduce the depreciable lives of certain real estate improvements, making them eligible for bonus depreciation.
A provision for penalty-free “coronavirus related distributions” from retirement plans.
A provision allowing tax refunds for some taxpayers who deferred taxes on deemed distributions from controlled foreign corporations.