As we all work to navigate the uncertainly around COVID-19, I wanted to share several articles and resources related to the tax implications for both employers and employees during the crisis.

Document Potential Business Interruption and Expense Due to COVID-19

An article from business consultants Conner Strong & Buckelew recommends that businesses consider five things when preparing for a potential business interruption:

  1. Prepare a timeline.
  2. Track and document key business metrics. *Attorneys should track all time spent dealing with COVID-19 issues.
  3. Track and document expenses that are related to the event (these may be new expenses or increased expenses as a result of the event).
  4. Track specific event related business activity, i.e. cancellations, customer complaints, returns.
  5. Compile a three year look back of financial data

Click here to read the entire article from Conner Strong & Buckelew.

Employers Can Provide Tax-Free Disaster Payments To Employees

An article from Forbes online on March 23 explains how employers can provide tax-free payments to employees affected by the crisis. The article cites Section 139 of the tax code noting that “Section 139 has yet to be used for a national pandemic.” Below is an excerpt from the article.

A reasonable interpretation of the statutory text, however, reveals that, at a minimum, the following payments from employer to employee should be treated as deductible to the employer and tax-free to the employee, provided the expenses relate to the COVID-19 pandemic:

  • Medical expenses of the employee that are not compensated for by insurance (for example, the employee’s deductible and out-of-pocket expenses);
  • The cost of over-the-counter medications and hand sanitizer;
  • Funeral costs of an employee or a member of an employee’s family;
  • The costs associated with enabling an employee to work from home throughout the pandemic, including the cost of a computer, cell phone, printer, supplies, and even increased utility costs of the employee.
  • The cost of an employee’s childcare or tutoring for family members that are not permitted to attend school throughout the pandemic.

Click here to read the entire article from Forbes.

The post COVID-19 UPDATE: 1)Documenting Business Interruption, 2)Employers Can Provide Tax-Free Disaster Payments To Employees first appeared on Real Life Practice.