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.
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June 2020
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March 2020
TaxNewsFlash – COVID-19 Developments
Tax updates on the response to the coronavirus reported from around the world
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Global Tax Developments Summary
Developments summarized and sorted by country as of July 6, 2020
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State and Local Tax Extensions Summary
Guidance by state on tax return filing extensions in response to COVID-19 as of May 27, 2020
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Flash Alerts – COVID-19 Global Mobility Updates
Developments affecting international assignees and their employers from Global Mobility Services
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TaxNewsFlash–United States
Latest U.S. federal developments related to COVID-19
June 2020
May 2020
April 2020
March 2020
State and local tax extensions (June 22 TWIST podcast and summary updates)
State Responses to COVID-19 and Other Important State Legislation
June 22, 2020
KPMG TWIST podcast | As the country moves forward with re-opening, state and local governments continue to address tax matters stemming from COVID-19. Highlights in this week's podcast cover developments in Colorado, Iowa, and New York.
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. Access the latest report (May 27, 2020) here. Updates made to the report by date, since launched, as well as new developments since that last report, are provided below.
May 20 | This issue of Chief Tax Officer Insights examines how CTOs are steering the tax function through COVID-19 and how they are seizing the benefits and limiting risks of the CARES Act.
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.
Insights by tax area of focus
CARES Act and other COVID-19 legislation
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.
Rev. Proc. 2020: Excepted Business Election and CARES Act Changes to Section 163(j)
April 17, 2020
The IRS on April 10, 2020, released an advance version of Rev. Proc. 2020-22, providing relief to make or withdraw a real property trade or business or farming business election and certain other elections related to the CARES Act changes to section 163(j). This article provides initial impressions of the revenue procedure guidance.
The CARES Act Executive Summary
April 16, 2020
The CARES Act is summarized on one page, providing an overview of the act's main tax and nontax provisions.
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.
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.
CARES Act – Net operating losses
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.
ATNOL Carrybacks under the CARES Act
April 16, 2020
This article addresses the interaction between the CARES Act's five-year NOL carryback provisions and the retained AMT rules.
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
Accounting and Reporting Impacts of the CARES Act
April 28, 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.
Liquidity
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.
Managing Global Indirect Taxes During COVID-19
May 21, 2020
This article provides an overview of potential savings opportunities and unintended consequences when managing global indirect taxes in today's environment.
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.
Initial Impressions of Additional FAQs on the Employee Retention Credit
April 30, 2020
The IRS on April 29, 2020, released additional “frequently asked questions” (FAQs) on the employee retention credit (ERC) provided by the CARES Act. This report provides initial impressions about these FAQs.
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.
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.
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
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.
Valuations
Goodwill Impairment Valuation Insights – FAQs
April 10, 2020
A number of frequently asked questions that typically arise when performing goodwill impairment tests in economic downturns are discussed.
Goodwill Impairment Valuation Insights
April 9, 2020
This article discusses the market participant acquisition premium, one of the most critical inputs to valuation analysis in goodwill impairment tests.
Tax insights by industry
Asset management
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).
Evaluating the Tax Impact of COVID-19 on RICs and Their Shareholders
April 20, 2020
Five key steps to enhance you tax position | This article is intended to provide a working checklist for the top five tax issues that have emerged to date for RICs of all types—mutual funds, exchange traded funds, closed-end funds, fund of funds, and business development companies.
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.
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.
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.
Drilling Down: Tax Implications of COVID-19 and Low Commodity Prices
April 28, 2020
This edition of KPMG Global Energy Institute's Drilling Down discusses the tax-related issues that oil and gas companies should keep in mind in the current environment for managing liquidity and debt concerns.
Plugged In: Tax Implications Related to COVID-19
April 27, 2020
This edition of KPMG Global Energy Institute's Plugged In provides an overview of recent tax developments relevant to power and utilities, particularly organizations with renewable energy projects in the works.
KPMG Global Energy Institute webcast | Tax Implications of COVID-19 on the Energy Industry
April 13, 2020
Discusses tax considerations and issues related to the COVID-19 outbreak.
Healthcare and life sciences
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.
Covid-19 Disruption in Life Sciences Industry—Tax, Trade, Value Chain Considerations
May 11, 2020
This article discusses significant challenges posed by COVID-19 disruption and some of the key issues for life sciences companies from tax, trade and valuation perspectives, covering supply chain, financing and cash flow, and research and development. Possible post-COVID-19 trends, opportunities, and issues for the industry are also discussed.
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 polling results | Disruption in Life Sciences
April 9, 2020
KPMG polled attendees on an April 9, 2020, to gather insights on some key tax issues this industry is facing as a result of COVID-19.
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.
KPMG webcast | COVID-19 Relief Provisions: What Non-profits Need to Know
April 6, 2020
Hear insights from KPMG professionals about the CARE Act provisions of relevant to non-profit organizations.
Industrial manufacturing, transportation
Infrastructure
COVID-19 and U.S. Tax Impacts for Infrastructure
June 10, 2020
This article considers key U.S. tax issues and questions that all infrastructure investors should consider in light of COVID-19's unprecedented impact on the global economy and financial markets.
KPMG TaxWatch webcast | The Impact of COVID-19 on the Infrastructure Industry
April 16, 2020
Discusses the regulatory, tax, valuation and industry implications of COVID-19, notably the expected impact on valuations, deal flow, fundraising, and ongoing asset performance, with consequences differing between sectors and contractual positions.
COVID-19 and Infrastructure Private Equity Valuations
April 9, 2020
This article, by the KPMG Valuations team, discusses the valuation challenges faced by infrastructure fund managers during volatile times and outline valuation considerations.
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.
KPMG podcast | COVID-19: Insurer Capital and Solvency – Having a Game Plan
April 22, 2020
Laura Gray, National Actuarial Network Leader, and Phil Jacobs, National Insurance Tax Leader, discuss capital and solvency challenges for insurers.
KPMG TaxWatch webcast | COVID-19 Insurance Tax Update
March 31, 2020
Discusses updates, considerations, and leading practices for insurance companies in the midst of the COVID-19 pandemic.
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.
COVID-19 and Private Equity Valuations
April 2, 2020
This article, by the KPMG Valuations team, provides investors in private equity insights on measuring fair value during the volatile times.
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
COVID-19 Impact: U.S. Real Estate Tax and Regulatory Resource Guidebook
May 26, 2020
This guidebook is intended to help real estate investors and operators address the seismic changes in the tax law and in the wider economy to help protect their business and prepare for the future, in the wake of COVID-19.
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.
Decisions, Decisions: COVID-19 Guidance and Real Estate
May 11, 2020
In this article, the author discusses decision points of tax provisions and guidance relevant to the real estate industry issued in response to the COVID-19 pandemic.
COVID-19 and Its Impact on Fair Value Reporting for Real Estate
April 14, 2020
This article discusses the unique valuation challenges that COVID-19 presents to real estate owners, investors, appraisers, and developers.
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.
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 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.
