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Trump’s Emergency Declaration Opens Door for Tax Relief

March 13, 2020, 8:19 PM

President Donald Trump’s national emergency declaration gives the IRS the authority it needs to provide tax relief to businesses and individuals amid the spread of Covid-19.

The president in a briefing Friday said declaring a national emergency to address the growing coronavirus problem will “unleash the full power of the federal government.”

Until now, Trump and Treasury Secretary Steven Mnuchin have talked in broad strokes about tax cuts and extending the filing season. Now the IRS can choose from a range of powers: abating penalties for failing to file or pay taxes, or postponing federal tax filing and payment deadlines without interest or penalties accruing, according to the agency’s Internal Revenue Manual posted on its website.

“Once you have the declaration, then the IRS can set the terms,” said former IRS Commissioner John Koskinen.

Now IRS and Treasury will sit down and discuss what the tax extension and relief will look like and any parameters they want to set because they have a wide range of options, he said.

The virus has been rapidly spreading through the U.S. with more than 1,600 total cases reported by the Centers for Disease Control and Prevention as of Friday and 41 deaths. The outbreak has led to businesses across the nation asking employees to work from home, the suspension of sport events and other large gatherings, and school closures.

The IRS has suspended all non-essential travel for its employees. But now the agency will have more workforce decisions to make.

Extending tax deadlines will give the agency more flexibility to process returns and deal with other filing season responsibilities, especially if more employees begin working remotely in response to the new coronavirus, Koskinen said. But that also means the IRS might have to keep seasonal employees on longer than it normally would, he said.

“So there are always management decisions you have to make about how you’re going to respond,” he said.

To contact the reporter on this story: Allyson Versprille in Washington at aversprille@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Colleen Murphy at cmurphy@bloombergtax.com

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