Insight

COVID-19: Insights on tax impacts

Tax and trade developments from around the world

Joe Hargrove

Joe Hargrove

Principal, Head of Tax Markets & Services, KPMG US

+1 212-872-5521

COVID-19 is having wide-ranging economic, business, and social impacts. Tax, trade, and other authorities around the world are responding with regulatory change, relief measures, and extensions. Updates on these developments and tax insights from KPMG related to impact of COVID-19 on business can be found below.

Tax Provisions in the CARES Act (COVID-19 "Phase 3" Response): Analysis and Observations

March 30, 2020

KPMG Report: Outlines in detail significant tax provisions in the CARES Act along with KPMG initial observations.

Webcast replays

TaxNewsFlash – COVID-19 Developments

Tax updates on the response to the coronavirus reported from around the world

Global Tax Developments Summary

Developments summarized and sorted by country as of April 6, 2020

State and Local Tax Extensions Summary

Guidance by state on tax return filing extensions in response to COVID-19 as of April 6, 2020

Flash Alerts – COVID-19 Global Mobility Updates

Developments affecting international assignees and their employers from Global Mobility Services

TaxNewsFlash–United States

Latest federal developments related to COVID-19

March 2020

State and local tax extensions

States and Legislatures Respond to COVID-19

March 30, 2020

KPMG TWIST podcast | In light of the COVID-19 pandemic, many states and localities have issued guidance on extensions of time to file and pay upcoming state and local taxes. This podcast highlights recent developments. A cumulative summary by jurisdiction is also available and can be accessed in the TaxNewsFlash alerts below, which note the most recent changes to the summary.

TaxNewsFlash – United States

State and local tax guidance, relief (COVID-19)

The KPMG State and Local Tax practice has prepared a report that, in table format, provides a summary of guidance from jurisdictions on extensions of time for filing and payment of income, sales and/or other state taxes, or penalty relief in light of COVID-19. Acces the latest report here. Updates made to the report by date, since launched, are available below.

March 19 March 20 March 23 March 24-1 March 24-2 March 25 March 26 March 27
March 30 March 31 April 1 April 2 April 3 April 6    

Insights by tax areas of focus – Reports, articles & more

Cash flow planning

Leveraging Tax Accounting Methods and Credits to Generate Cash Flow

March 30, 2020

The new CARES Act includes tax provisions designed to support the efforts of companies to preserve and perhaps enhance cash flow. This, along with traditional tax accounting method and credits techniques and procedures, can provide companies with means to support cash management efforts. Consider this summary of 15 opportunities (some extremely time sensitive) that can help drive cash flow.

Payroll Offsets Using R&D Tax Credits

March 20, 2020

Small businesses may be looking for ways to better manage cash flow and total tax liabilities—in particular given the challenges that U.S. businesses are facing with regard to the COVID-19 pandemic. A section 41(h) election may provide opportunities for eligible small businesses. Under section 41(h), a qualified small business can elect to convert up to $250,000 per year, for up to five years, into payroll offset credits.

Tax issues arising from changes to business/workforce operations

Managing through Uncertainty: Is Everything Going to Be OK?

April 9, 2020

The KPMG Global Mobility Services team addresses the fear stage of the COVID-19 curve for mobility and/or HR departments. Part 2 of an 8-part series.

Employer-related Liquidity – Tax Credits, Deferrals, and Efficiencies (COVID-19)

April 3, 2020

This report summarizes select labor-related tax provisions of the CARES Act, the Families First Coronavirus Response Act, and provisions triggered by the COVID-19 National Emergency Declaration.

Managing through Uncertainty: What Is Happening?

April 1, 2020

The KPMG Global Mobility Services team looks into the effects of COVID-19 and the key areas organizations need to focus on during this uncertain time. Part 1 of an 8-part series.

State and Local Employment Tax Guidance in Response to Coronavirus (COVID-19)

March 31, 2020

Several states and local jurisdictions have issued guidance in response to the coronavirus (COVID-19) pandemic. A brief summary of these changes can be found in this edition of KPMG Payroll Insights. Hyperlinks are provided to the state or municipal website where additional guidance can be found.

Compensation and Benefits Considerations in a Troubled Economy

March 30, 2020

This article addresses some of the more frequent compensation and benefits tax considerations that can arise during difficult economic times.

Employers Providing Employee Hardship Assistance Related to Coronavirus

March 17, 2020

President Trump, on March 13, 2020, declared the coronavirus outbreak to be a national emergency. This declaration not only frees up resources that the federal government may use to address the crisis but also expands the options that businesses have to help employees hit by hardship as a result of the virus. This report reviews the options for employer to provide assistance directly or through charities or foundations.

Compensation Benefits Concerns in Uncertain Times—Telecommuting and Other Items

March 15, 2020

Efforts to contain the 2019 novel coronavirus (COVID-19), declared by the World Health Organization as a pandemic, have led many employers (whether voluntarily or pursuant to government action) to change the normal working environment and operating procedures. This report focuses on the initial approaches that employers are taking, such as increased telecommuting, and the resultant tax considerations.

Asset management industry

Asset Management: Tax Implications of the Disaster Declaration for the United States

March 30, 2020

Two tax provisions that may be useful to organizations in the asset management industry activated when President Trump declared a national emergency on March 13, 2020. This article discusses these provisions: section 165(1) – one-year carryback of 2020 losses and Section 139 – tax-free payments to employees and partners.

Private equity

The CARES Act: Considerations for Private Equity Funds with Corporate Portfolio Companies

April 3, 2020

Private equity funds and their corporate portfolio companies may benefit from the net operating loss and other tax provisions included in the CARES Act. This article highlights certain of the income tax provisions, and resulting opportunities, relevant to the operation and the acquisition/disposition of private equity portfolio companies classified as corporations for U.S. federal tax purposes.

Real estate investment trusts

The Use of Elective Stock Dividends by a Publicly Offered REIT—What to Consider

March 30, 2020

Should a widely held real estate investment trust (REIT) use elective stock dividends in an effort to build up cash reserves? Before engaging in this form of tax planning, REITs would benefit from a high-level summary of the process and an evaluation of the underlying considerations.

Distressed Debt—REIT Considerations

March 30, 2020

Investors, including existing and newly formed mortgage real estate investment trusts (REITs), with liquidity may acquire distressed investments. Special considerations associated with REITs should be taken into account, however.

Hoarders, REIT Edtion: Cash Conservation in the Time of Coronavirus

March 23, 2020

To address issues presented by the COVID-19 pandemic, Congress is considering extraordinary stimulus measures, including significant changes to the tax laws. Businesses of all types, including REITs, are evaluating how to preserve liquidity, and there are some things that REITs can do (or at least consider) now to conserve cash.

A Common Question from Hotel REITs: Should the TRS Lease Be Amended during Tough Times?

March 23, 2020

With the COVID-19 pandemic—which has led to a reduction in travel (business or pleasure) and temporary closures (voluntarily or involuntarily)—many hotel "taxable REIT subsidiaries" (TRSs) are likely facing operational challenges in the near term. Thus, a threshold question is whether it is permissible for a hotel REIT and its TRS to modify an existing lease during its term.

Income tax accounting

Accounting and Reporting Impacts of the CARES Act

April 2, 2020

This KPMG Hot Topic Issue addressed key accounting and financial reporting impacts of the CARES Act on companies applying US GAAP.

Income Tax Accounting Impacts, including Interim Estimates & Valuation Allowances

March 20, 2020 (Updated March 30, 2020)

This KPMG Hot Topic issue addresses the possible income tax accounting impacts stemming from the economic and financial markets effects of the COVID-19 outbreak.

 

 

Lending Programs under CARES Act, Interactions with Tax Provisions

April 2, 2020

The CARES Act establishes two lending programs—the Small Business Administration-administered “paycheck protection program” and the Treasury Department’s economic stabilization—that provide nearly $900B to support lending to small and large businesses. This KPMG report outlines the requirements for the paycheck protection program, the economic stabilization fund, and the interaction with the tax provisions of the CARES Act.

INSIGHT: Covid-19 Puts Limited Risk Structure at Risk—Analysis from the Chinese Angle

March 26, 2020

Many multinational companies deploy limited risk structures, such as contract manufacturing or limited risk distribution, in their global operations, including China.This article sets out what taxpayers should consider in analyzing the steps to be taken to manage transfer pricing risk in light of declines in profits of limited risk companies resulting from the demand supply shocks caused by the COVID-19 outbreak.

Timing Considerations for QOF & QOF Investors in Light of COVID-19

March 24, 2020

There are a number of important timing and planning considerations with respect to existing and potential “qualified opportunity fund” (QOF) investments that may be affected by the current situation resulting from the coronavirus (COVID-19) pandemic.