Insight

COVID-19: Insights on Tax Impacts

Tackling Tax Today

Joe Hargrove

Joe Hargrove

Principal, Head of Tax Markets & Services, KPMG US

+1 212-872-5521

Helping You Navigate the Current Environment
Read about the top-of-mind challenges facing businesses in today's environment. KPMG is dedicated to working with you to help solve these challenges.
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 Issues Banks Should CARE(S) About in Light of COVID-19
August 3 (updated November 6) | This KPMG Report addresses tax issues that are currently affecting banks and their customers, including the impact of the CARES Act.
COVID-19: Telemedicine and Tax, Examining the Need for Tax Clarity
September 1 | This KPMG paper examines various tax considerations surrounding telemedicine in light of its accelerated acceptance as a result of the current COVID-19 environment.
KPMG COVID-19 Global Tax Relief Evaluator
May 5 | The Evaluator allows you to create customized reports describing COVID-19 tax relief provisions available by country, compare tax relief provisions, and assess which tax relief benefits provide the best potential cash benefits.
Chief Tax Officer Insights – COVID-19 Topics
September 2020 | This issue discusses: How can your tax department continue to enhance the remote working environment? And has your organization's willingness to pursue government tax relief changed as eligibility rules become clearer?

 

 

TaxNewsFlash – COVID-19 Developments

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

COVID-19 Global Tax Developments Summary

Developments summarized and sorted by jurisdiction as of November 22, 2020

Flash Alerts – COVID-19 Global Mobility Updates

Developments affecting international assignees and their employers

TaxNewsFlash–United States

Latest U.S. federal developments related to COVID-19

October

September

August

July 2020

June 2020

May 2020

April 2020

March 2020

State and local tax updates

Tax relief, updated state and local tax guidance 

October 26, 2020 update | State and local governments continue to address tax matters stemming from COVID-19. New and updated information from New Jersey, New York State, and Oregon has been added.


 

Webcasts

On-demand replays

August 2020

July 2020

June 2020

May 2020

April 2020

March 2020

Insights by tax area of focus    

Transfer pricing considerations

CARES Act and other COVID-19 legislation and guidance

Initial Analysis of Notice 2020-65, Guidance on Employee Payroll Tax Deferral

August 31, 2020

The IRS and Treasury Department late on Friday, August 28, 2020, released an advance version of Notice 2020-65 providing guidance on an employee payroll tax deferral as directed by President Trump’s August 8 memorandum. This KPMG report outlines the guidance and provides initial insights on the possible implications for taxpayers.

The Recent COVID-Related Executive Actions and Implications for Legislation

August 14, 2020

Catching Up on Capitol Hill podcast | John Gimigliano, Jennifer Gray, and Carol Kulish from the Federal Legislative & Regulatory Services group of the KPMG Washington National Tax practice try to answer the question of how the recent executive actions from the administration might affect Congressional efforts to enact further COVID-19-relief legislation. [16:11]

COVID Relief – Looking at the Senate’s HEALS Act

July 29, 2020

Catching Up on Capitol Hill podcast | The Senate has released its next COVID relief plan, the HEALS Act, which presents both interesting policy and procedural aspects. Carol Kulish and Jennifer Gray join John Gimigliano to discuss why HEALS looks the way it does and where it might be headed. [16:20 minutes]

Legislative update: Compensation and benefits issues in Senate Republican COVID-19 bills

July 29, 2020

Senate Republicans this week released several bills intended to serve as components of a Senate response to COVID-19. This summary focuses on provisions in two of the bills that could affect compensation and benefits issues. These provisions address modifications to the ERC; introduce a new tax credit for certain COVID-19-related expenses; and provide clarifications related to several CARES Act qualified plan issues.

Recent Economic and Social Developments May Affect Legislation Timing

June 18, 2020

Catching Up on Capitol Hill podcast | John Gimigliano, Jennifer Acuna, and Carol Kulish from the Federal Legislative & Regulatory Services group of the KPMG Washington National Tax practice discuss how the week's events—the jobs report and increasing national focus on racial inequality—may impact the timing of additional COVID-19 relief legislation. [11:00 minutes]

HEROES Act Negotiations Unpacked – Tax Components

June 10, 2020

Catching Up on Capitol Hill podcast | John Gimigliano, Jennifer Acuna, and Tom Stout from the Federal Legislative & Regulatory Services group of the KPMG Washington National Tax practice discuss COVID-19 relief legislation, focusing on the HEROES Act passed by the House of Representatives and the Senate's possible response. [13:25 minutes]

How Might Congress Enact Additional COVID-19 Relief Legislation

June 9, 2020

Catching Up on Capitol Hill podcast | John Gimigliano, Jennifer Acuna, and Tom Stout from the Federal Legislative & Regulatory Services group of the KPMG Washington National Tax practice discuss whether, when, and how Congress might enact additional COVID-19 relief legislation. [14:51 minutes]

CARES Act Changes to Section 163(j) for Partnerships

May 11, 2020

The CARES Act makes significant changes to the section 163(j) business interest expense limitation rules. This article discusses what partnerships and partners should take these changes into consideration when formulating cash retention and transaction structure planning, as well as organizing compliance efforts.

Relief for Taxpayers to Correct, Change QIP Depreciation Methods

April 22, 2020

Rev. Proc. 2020-25 provides relief for taxpayers to correct "qualified improvement property" (QIP) depreciation methods and to retroactively make, revoke or withdraw certain depreciation elections related to the CARES Act technical correction of section 168. This report discusses the Rev. Poc. 2020-25 relief.

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.

CARES Act – Net operating losses

Expediting NOL Refunds

July 20, 2020

In this letter to the editors of Tax Notes Federal, the authors update their June 8, 2020, article, titled "Navigating IRS Fax Rules to Expedite NOL and Minimum Tax Refunds" (see below), providing an updated table of deadlines for filing Forms 1139 based on supplemental IRS guidance.

Navigating IRS Fax Rules to Expedite NOL and Minimum Tax Refunds

June 8, 2020

In this article, the authors examine the benefits and requirements of the expedited tentative refund procedure for net operating loss carrybacks and unused minimum tax credits, with special emphasis on temporary procedures adopted by the IRS in light of the coronavirus pandemic under the CARES Act.

IRS FAQs on NOL Carrybacks for Taxpayers with Section 965 Inclusions (COVID-19)

April 24, 2020

The IRS on April 23, 2020, released a set of frequently asked questions (the Section 965 FAQs) that address the interaction of the new CARES Act net operating loss (NOL) carryback provisions with taxpayers’ section 965 “transition tax” liabilities and inclusion years. This reports provides KPMG observations on the FAQs, which largely follow the previously released guidance in Rev. Proc. 202-24 and Notice 2020-26.

Rev. Rul. 2020-8 and 10-year Limitations period, FTC and NOL Carrybacks

April 20, 2020

The IRS on Friday afternoon, April 17, 2020, released an advance version of a new revenue ruling (Rev. Rul. 2020-08) addressing the appropriate period for refund claims resulting from a foreign tax credit (FTC) carryback that was “released” by reason of a net operating loss (NOL) carryback from a subsequent year. This summary provides KPMG initial impressions of Rev. Rul. 2020-08.

THE CARES Act and CNOLS: Avoiding Unanticipated Consequences

April, 13, 2020

The CARES Act resurrects a five-year NOL carryback rule, in recognition of the immediate cash flow needs of American businesses and the valuable counter-cyclical role that NOL carrybacks can provide during a time of widespread financial stress. In this letter to the editor of Tax Notes Federal, the authors wish to raise awareness of certain issues related to this NOL carryback and consolidated returns.

Initial impressions of IRS guidance implementing NOL provisions in CARES Act

April 10, 2010

The IRS has issued guidance—Rev. Proc. 2020-24 and Notice 2020-26—providing needed and helpful guidance on implementation and reporting of the expanded net operating loss (NOL) provisions contained in the CARES Act. The following discussion provides initial impressions of the guidance provided by Rev. Proc. 2020-24 and Notice 2020-26.

Income tax accounting

Liquidity

Addressing Liquidity Issues during COVID-19 Using Intercompany Pricing Tools

July 20, 2020

The COVID-19 pandemic has created economic instability and associated liquidity strains for businesses globally. This article identifies various transfer pricing approaches that can be deployed to meet short-term and long-term operational, financial, and capital needs by conserving available cash, enhancing access to external sources of new liquidity, and tapping into cash reserves in multiple jurisdictions.

COVID-19 Transfer Pricing Implications for Intercompany Loans

May 4, 2020

The COVID-19 crisis has had significant effects on financial markets, including increased interest rate volatility and reduced debt issuances in broad sectors. This article discusses the greater care that should be taken when implementing or modifying intercompany debt funding to help ensure that the financing is respected as debt and the interest expense is deductible for tax purposes.

Leveraging Tax Accounting Methods and Credits to Generate Cash Flow

April 22, 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 that can help drive cash flow.

Current Cash Refund for Costs of Abandoned Transactions

March 30, 2020

Businesses that cancel transactions may be able to take loss deductions for costs incurred in connection with those abandoned transactions to the extent the costs were not already deductible; the losses may be carried back and potentially generate tax refunds. This article provides an overview of the 165(a) deduction and focuses on the application of the section 165(i) and section 172(b)(1)(D) carryback provisions.

Qualified opportunity zones

Valuations

Tax insights by industry

Asset management

Current Topics in Asset Management Transfer Pricing

October 30, 2020

This publication looks at COVID-19 impacts on transfer pricing for asset managers and considerations for analyzing cash repatriation, mitigating cash outlays, evaluating intercompany financing, and achieving transfer pricing certainty.

KPMG podcast | COVID-19 Impact on Business Development Companies

May 28, 2020

COVID-19 and the resulting economic downturn are testing market liquidity, portfolio company business models and valuation policies and procedures in ways that they have not been tested since the Great Recession of 2008-2009. In this podcast, KPMG Tax Partner Deidre Fortune joins Audit partners Sean McKee, Matt Giordano, and Andrew Parsons examine the implications for business development companies.

COVID-19 and Corporate Credit Valuations

April 1, 2020

COVID-19 as well as the geopolitical forces that have driven oil prices to lows not seen since 1999 has severely affected the corporate credit market. This article, by the KPMG Valuations team, provides market participants who invest in illiquid and private loans insights in how to meet related valuation challenges.

Regulated investment companies

Podcast | COVID-19 Tax Impact on RICs

June 16, 2020

KPMG Investment Management Perspectives podcasts | Listen as KPMG thought leaders Deanna Flores, Deirdre Fortune, and Brandon Andres discuss the tax impact COVID-19 is having on regulated investment companies (RICs).

Banking and capital markets

Consumer and retail

COVID-19-related Inventory Impairments; Cash Flow Opportunity for Resellers

April 21, 2020

Wholesalers, retailers, and similar businesses (referred to collectively in this report as “resellers”) may have an opportunity to enhance current cash flow by treating COVID-19-related inventory impairments as disaster losses eligible to be recovered on the 2019 federal tax return, rather than accounting for those losses through their inventory accounts in 2020. This report outlines related considerations.

Energy

Initial Impressions, Notice 2020-41 & “Beginning of Construction” under Sec. 45 and 48

May 29, 2020

Renewable energy facilities are eligible for certain tax credits if construction of the facilities proceeds according to timelines designated by the IRS. COVID-19 is causing delays in the construction of such facilities and, in response, the IRS recently issued Notice 2020-41, which provides taxpayers with additional time to complete construction. This KPMG Report provides initial impressions of the notice.

Healthcare and life sciences

COVID-19: Telemedicine and Tax

September 1, 2020

Telemedicine's accelerated acceptance in light of the COVID-19 environment and recent changes to regulatory and reimbursement rules has resulted in the need for greater clarity on possible tax implications. This KPMG paper examines various considerations relating to telemedicine and explores several hypothetical scenarios providing possible interpretations of tax outcomes.

COVID-19 Impact on Physician Compensation

June 8, 2020

The article highlights the impacts of COVID-19 on physician compensation and the factor to consider when addressing the impacts, including the opportunity to re-design ad standardize compensation plans and a potential shift to additional value-based contracting, all with a lens on fair market value compliance.

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

May 11, 2020

The effects of the coronavirus (COVID-19) pandemic on the U.S. economy and different businesses have resulted in certain rent concession requests from tenants. In turn, this raises a common question when the landlord is a REIT that leases property to a related tenant: Should a lease between the healthcare REIT and its taxable REIT subsidiary (TRS) be modified? This article examines this question.

COVID-19 and Its Potential Impact on Health Insurance Exchange Enrollment

April 26, 2020

With over half of U.S. individuals having their health insurance tied to their employment, and an estimated 40.5 million anticipated to lose their jobs through June 2020, many may also lose health coverage. In this report, KPMG professionals outline individuals’ options to get and stay covered and estimate new health insurance exchange enrollments in state-based exchanges and through HealthCare.gov.

KPMG Healthcare & Life Sciences webcast | COVID-19 & Telemedicine: Regulatory & Tax Update

April 15, 2020

Addresses, in light of the significant rise in the use of telemedicine and changes to the related regulatory and reimbursement rules, such questions as: How has the legislative and regulatory environment changed recently in response to COVID-19 with respect to telemedicine? What federal income tax issues apply to both taxable and tax-exempt healthcare providers who employ telemedicine? And more.

Tax Considerations of Disruptions in Healthcare Industry in COVID-19 Environment

April 14, 2020

The COVID-19 pandemic has caused unprecedented operational and economic disruption that reaches every corner of a healthcare organization, even the tax function. Tax leaders in both taxable and tax-exempt healthcare organizations need to be mindful of the tax consequences that can flow from these business changes. This report highlights some of the tax issues and opportunities.

KPMG webcast | Disruption in Life Sciences: Tax, Trade and Value Chain Implications

April 9, 2020

Discusses the impact of COVID-19 on the life sciences industry. Topics include implications of fluctuating production capacity and constrained resources; federal and international tax issues related to process and innovation R&D, changing asset value, inventory, increased capital needs and potential losses; and latest and potential future U.S. trade and customs developments affecting life sciences.

Higher education, research, and other nonprofits

KPMG webcast | Update on COVID-19 Legislation & Guidance for Higher Education Institutions

April 28, 2020

Addresses top of mind issues for higher education institutions related to accessing COVID-19 relief and ensuring compliance, including changing procedural tax requirements; the CARES Act payroll provisions; accessing and implementing resources from the Higher Education Emergency Relief Fund; and the FEMA Assistance program and how it applies to higher education institutions alongside insurance and grants.

Industrial manufacturing, transportation

Infrastructure

Insurance

KPMG Report: Insurance-related Measures in Consolidated NOL Regulations

July 7, 2020

Temporary regulations (T.D. 9900) and proposed regulations (REG-125716-18) released for publication in the Federal Register by the U.S. Treasury Department and IRS provide guidance under sections 1502 and 172 regarding consolidated net operating losses (NOLs). This report focuses on the implications of the proposed regulations regarding the treatment of consolidated NOLs of life insurance companies.

Private equity

COVID-19 Transfer Pricing Strategies for Private Equity Portfolio Companies

April 20, 2020

Disruptions to supply and distribution chains have created pressure on corporate profitability and cash flows. These pressures can be magnified for typically highly leveraged private equity portfolio companies. This report explores transfer pricing strategies for these companies and finds that proactive steps to revisit transfer pricing policies may provide opportunities to reduce tax liabilities and preserve cash flows.

Debt Restructuring Considerations for Private Equity

April 8, 2020

As a result of the impact of COVID-19 on the global economy and capital markets, many businesses are assessing the need to restructure their debt. This article outlines the key related tax considerations for private equity funds and their portfolio companies.

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

Documenting Changes in Intent and the Dealer Property Analysis

May 22, 2020

Market disruption brought on by COVID-19 will cause many real property owners and developers to re-evaluate their plans (either voluntarily or involuntarily) with respect to property that they hold. This article discusses a number of points to consider with respect to such property that could affect taxation upon a current or future sale.

COVID-19 and Distressed Leases

May 22, 2020

Many taxpayers with real estate ventures may be encountering tenants who are having troubling paying their rents and are considering entering into forbearance agreements or modifications with respect to their leases. This article highlights the tax implications of these distressed leases and the requirements to continue to recognize rental income even when payments are not actually being made that landlords need to understand.

Real estate investment trusts

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

May 11, 2020

The effects of the coronavirus (COVID-19) pandemic on the U.S. economy and different businesses have resulted in certain rent concession requests from tenants. In turn, this raises a common question when the landlord is a REIT that leases property to a related tenant: Should a lease between the healthcare REIT and its taxable REIT subsidiary (TRS) be modified? This article examines this question.

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

May 11, 2020

COVID-19 is causing uncertainty and changing the business environment for the real estate investment trust (REIT) industry. The IRS on May 4, 2020, released Rev. Proc. 2020-19 providing temporary relief to some REITs using an elective stock dividend. This article outlines what publicly offered REITS should consider when evaluating whether to use an elective stock dividend.

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 Edition: 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.