World responds to coronavirus with tax breaks and extensions
Update 3.16.2020: For more details and the most up-to-date information, visit our Coronavirus tax relief roundup.
As the impact of the spread of the new coronavirus (COVID-19) intensifies, many countries have announced value-added tax (VAT) breaks and filing extensions to bolster businesses. In the United States, which lacks a comparable federal sales tax, individual states are starting to respond as well.
VAT lends itself to this sort of quick action. As Richard Asquith, vice president of global indirect at Avalara explains, “VAT can be adjusted overnight, and boost consumer spend immediately.” Details about the global VAT response to COVID-19 is available in Richard’s article, World turns to VAT cuts on coronavirus threat.
Sales tax in the U.S. is nowhere near as nimble as VAT. State legislatures typically are slow to enact sales tax changes. While they’ve been known to eliminate exemptions to bolster state coffers or reduce or eliminate sales tax, such changes usually occur only after much spirited debate.
On the other hand, state tax authorities are often quick to offer tax relief for businesses affected by natural disasters, such as hurricanes and tornadoes. To date, the following states have said they’ll work with businesses that can’t file or pay their taxes on time due to COVID-19:
Click on the links above for state-specific details.
At the federal level, the White House announced, “President Trump will be instructing the Department of the Treasury to defer tax payments for certain individuals and businesses negatively impacted by the coronavirus.” The President is also calling for Congress to pass payroll tax relief.
It’s likely additional states will offer tax relief as COVID-19 spreads. We’ll update this post as more information becomes available. In the meantime, be well.
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