Relief for taxpayers as filing deadline delayed 90 days
In a move to relieve financial stress on Americans, Treasury Secretary Steven Mnuchin said individual taxpayers can get a deadline extension on paying taxes of up to $1 million and corporations can defer tax payments of up to $10 million.
The 90-day delay gives taxpayers additional time to pay their outstanding tax liabilities without interest or penalties. The White House is encouraging taxpayers to file by April 15 if they don’t owe the IRS any money.
The Trump administration is also backing sending direct payments of $1,000 or more to Americans within two weeks as part of an $850 billion plan to blunt some of the economic impact of the widening coronavirus outbreak.
“Americans need cash now, and the president wants to give cash now. And I mean now, in the next two weeks,” Mnuchin said during a White House briefing alongside President Trump.
The cash payments would be part of a stimulus plan Mnuchin is negotiating with Congress. The administration hasn’t decided on how much to send Americans, but wants the checks to exceed $1,000, according to two people familiar with the matter. Mnuchin said the administration will aim not to send checks to millionaires but stressed the need for urgency. He said he talked Tuesday morning with House Speaker Nancy Pelosi and he met with Republican senators at the Capitol later.
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“I think we’re going to do something that gets money to them as quickly as possible,” Trump said. The president said he still favored a payroll tax holiday but indicated he was willing to defer to his advisers and a growing number of lawmakers who are getting behind direct payments.
Mnuchin also said the government intends to keep stock markets open.
Plunging stock prices and the abrupt drop-off of consumer spending during a time of social distancing has crystallized the need for Congress to act quickly and boldly. The Fed has already used much of its toolbox to shore up the economy, leaving policymakers to dull the extent of the damage with fiscal stimulus.
News of stepped-up government efforts to offset the financial damage caused by the outbreak prompted a rebound in U.S. stocks. The S&P 500 jumped as much as 7% before paring back to 4%, continuing a streak of volatility last seen during the Great Depression. The Dow notched a 2% gain.
The Senate on Tuesday was poised to take up a House-passed economic relief measure. That package, negotiated by Mnuchin and Pelosi last week and blessed by the president, pays for virus testing, bolsters unemployment and food assistance and will send tens of billions in fresh aid to states. Its centerpiece gives workers at companies with fewer than 500 employees up to 12 weeks of paid family and sick leave to deal with issues involving the coronavirus, including staying home to care for children home from school. The tax credits for paid family, sick and medical leave in the virus bill would cost nearly $104.9 billion, according to the Joint Committee on Taxation.
It wasn’t clear whether the Senate would attempt to add additional provisions to that legislation or take up a bigger stimulus bill separately.
Senator John Thune, the No. 2 Republican leader, said they have not determined a path forward on added stimulus beyond the House bill, but various options are under discussion.
“We’re not going to slow the process down on the House-passed package unless there’s a good reason to do it,” he said.
The idea of issuing checks to Americans has been endorsed by lawmakers across the ideological spectrum. But it may not be practical to get money to Americans as fast as Trump desires. When Congress sent stimulus checks in 2009 to combat the financial crisis, it took more than two months from the signing of the bill to checks hitting the mail.
It’s quickest and simplest for Congress to send the same amount to every individual person, but still will take months to happen, Marc Gerson, a former tax counsel for the House Ways and Means Committee, said. If lawmakers decide to give more money to lower-income workers, it becomes even more complicated.
“There are practical limitations with cutting checks,” he said.
Jared Bernstein, an economist at the Center on Budget and Policy Priorities, said that if the checks do, in fact, go out in two weeks, the boost to the economy will be seen in three weeks. “That’s how much people are already pressed. Those checks will go right into revolving debt payments like mortgages or credit cards, or putting food on the table.” — Josh Wingrove, Laura Davison and Saleha Mohsin, with assistance from Mario Parker and Laura Litvan