Coronavirus

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As the UK’s lockdown is relaxed and unemployment figures are expected to continue to rise, the UK Chancellor gave his summer statement announcing measures to stimulate the economy as it recovers from the effects of coronavirus with a clear emphasis on encouraging people to spend money, particularly in the hospitality sector, to try to protect as many jobs as possible.

The UK Chancellor stated the stark fact that in the space of two months during the pandemic the UK’s economy contracted by 25%, which is the same amount as it grew in the previous eighteen years and the IMF expects this to be the deepest global recession since records began. In the Chancellor’s words “the job has only just begun”. The summer statement’s focus was the Chancellor’s plan for jobs: supporting people to find jobs, creating jobs and protecting jobs. Key points to note:

In light of COVID-19, and in response to requests from European trade associations, the European Commission has published its proposal to amend Directive 2011/16/EU which deals with various strands of administrative co-operation in the field of taxation. Significantly, the proposal includes an extension to the time limit for reporting information…

On May 12, 2020, House Democrats introduced the Health and Economic Recovery Omnibus Emergency Solutions Act (the “HEROES Act”) (H.R. ___), a $3 trillion stimulus bill that would provide additional relief in response to the COVID-19 pandemic and resulting economic downturn.  The HEROES Act would eliminate the limitation on the deduction for state and local taxes for 2020 and 2021 and enhance and expand the earlier Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) (H.R. 748) and the Families First Coronavirus Response Act (the “FFCRA”) (H.R. 6201). However, the HEROES Act would also reverse some of the changes in the CARES Act by paring back the ability of a corporate taxpayer to carry back net operating losses and restoring the limitations on excess business losses for a noncorporate taxpayer. Republicans have dismissed many provisions in the HEROES Act, and there are no immediate plans for it to be considered by the Senate.[1] This blog summarizes some of the most important tax provisions in the bill.[2]

On May 4, 2020, the IRS issued Revenue Procedure 2020-19, which temporarily allows a publicly-offered REIT or RIC to pay as much as 90% of a distribution in its own stock (rather than cash or other property) and still have the entire amount treated as a dividend for US federal income tax purposes. As a result, the distribution will qualify for purposes of the REIT or RIC’s dividend distribution requirement and the dividend paid deduction, so long as certain requirements are satisfied.  Revenue Procedure 2020-19 closely follows the format of similar guidance issued during the 2008 financial crisis and applies to distributions declared on or after April 1, 2020, and on or before December 31, 2020.

We continue our blog series on COVID-19 implications on executive compensation matters with a post that addresses considerations relating to amending performance goals under equity and other incentive awards.

Setting meaningful and effective performance goals often requires significant focus and analysis by compensation committees with the assistance of their advisors…

On May 6, 2020, Senators Chuck Grassley (R. Iowa) and Ron Wyden (D. Ore.), the Chair and Ranking Member of the Senate Finance Committee, introduced the Small Business Expense Protection Act of 2020 (S. ___),[1] which would reverse a recent Internal Revenue Service (“IRS”) Notice and permit deductions for expenses that relate to loan forgiveness under the Small Business Administration’s Paycheck Protection Program (the “PPP”). On May 8, 2020, a bipartisan group of Representatives introduced the Jumpstarting Our Businesses’ Success Credit Act (the “JOBS Credit Act”) (H.R. ___), which would expand the employee retention tax credit available under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) (H.R. 748). [2]  This blog summarizes these bills.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) (H.R. 748).  This blog post summarizes the tax provisions of the CARES Act, and has been updated to reflect subsequent guidance from the Internal Revenue Service (“IRS”) on these provisions, and the Paycheck Protection Program Flexibility Act of 2020 (H.R. 7010).

On April 1, 2020, the Internal Revenue Service (“IRS”) posted on its website a series of frequently asked questions (“FAQs”) that explain the COVID-19-related tax credits available to small and midsize employers who are required to provide paid leave under the Families First Coronavirus Response Act (the “FFCRA”), which was signed into law by President Trump on March 18, 2020.  This blog summarizes some of the key items addressed by the FAQs, including which employers are eligible for these credits, and the requirements and documentation necessary for claiming the credits.