Coronavirus Update - Tax and Legal Alert for Michigan
Over the past few days, there has been a lot of news from our national and state leaders attempting to deal with the spread of the deadly coronavirus. The U.S. Treasury has granted important relief to taxpayers for federal taxes. The Michigan governor is responding with other forms of relief and appears to be considering more relief optinos as the situation becomes more dire and the "shelter in place" orders from other governors increase. This blog post provides an update for important tax and legal executive orders. Important legislation is pending at the national level to provide financial relief to both individuals and companies who are struggling with lost wages and sales.
What Relief Has the U.S. Treasury Provided to Date?
Treasury Secretary Mnuchin has extended the time to file U.S. income tax returns and pay U.S. income taxes until July 15. The Treasury provided initial guidance under the Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic at https://www.irs.gov/pub/irs-drop/n-20-17.pdf. The latest guidance updates this notice and increases the relief available to taxpayers, including C corporations.
Now, tax return filings are due by July 15, providing all taxpayers with an automatic 90 day extension without interest, penalty or other additions for failure to timely file an income tax return. No additional penalties, interest or other additions will be added during the period from April 15 to July 15 for late payment of income taxes. There is no limit on individual income taxes - this update removes the $1,000,000 cap on penalty relief. Tax relief under this notice also extends to estate or trust income taxes. For individuals, the payment extension applies to all income tax payments including self-employed individuals. This relief is granted automatically and no additional forms or extension requests are necessary.
What New Federal Legislation was Passed by President Trump to Help the Economy?
The Families First Coronavirus Response Act (FFCRA) was signed by President Trump on March 18, 2020. The FFCRA provides payroll tax relief from companies with fewer than 500 employees, including two new refundable payroll tax credits.
What has Michigan Governor Whitmer Done to Help Michigan Residents?
Governor Whitmer has successfully lobbied for small business loans to help businesses with immediate working capital needs. This effort is the result of the U.S. Congress making $1 billion of funds available for small businesses.
The application for disaster loan assistance is available at https://disasterloan.sba.gov/ela/. For businesses looking for more information on how to apply for an SBA EIDL loan or whether it is something they should consider, visit michiganbusiness.org/covid19.
Governor Whitmer has also signed two executive orders that provide certain relief to Michigan residents. The first extends relief for late property tax payments to help prevent foreclosure. The second provides from relief to tenants from eviction until April 17, 2020.
Executive Order 2020-14, moves the tax foreclosure deadline from March 31, 2020, to May 29, 2020, or 30 days after the state of emergency declared in Executive Order 2020-4 is terminated, whichever comes first. This order is effective immediately as of March 18, 2020. This is important because homeowners facing tax foreclosure have until March 31st of the year after a judgment for foreclosure has been entered to redeem the property by paying the property tax balance due.
If the homeowner fails to pay the back property tax balance, which includes interest, penalties and fees, then the homeowner loses title to the property and cannot redeem the property. The only recourse then is to attempt to purchase the property at the county auction.
The second Executive Order issued on March 20, 2020, provides immediate relief to residential tenants facing eviction. Under Executive Order 2020-19, "no person shall remove or exclude from leased residential premises or residential premises held under a forfeited executory contract a tenant, a vendee of a forfeited executory contract, or a person holding under a tenant or vendee, except when the tenant, vendee, or person holding under them poses a substantial risk to another person or an imminent and severe risk to property. This order should be broadly construed to effectuate that purpose. This section is effective immediately and continues until April 17, 2020 at 11:59 pm."
Further, a landlord may not enter a tenant's leased premises to remove the tenant or remove the tenant's personal belongings. Self-help by a landlord is prohibited under Michigan law, so a landlord cannot lockout a tenant or throw a tenant's property out on the street. Courts will not process evictions during this period.
Violating this executive order is a misdemeanor.
If you have questions about any of these updates, please contact attorney Andrew Steiger to discuss your legal or tax relief options. These updates are designed to avoid economic hardship for Michigan residents, and more are sure to follow as the coronavirus damage grows. Steiger Tax Law will provide further updates as they arise. Contact Andrew Steiger at 248-259-6367 or Andrew.Steiger@steigertaxlaw.com.