Items to be Reviewed Amid COVID-19

We are living in a different world than we were just two weeks ago. Below, we have laid out several changes and topics that may need to be reviewed more closely given the other changes in our current situation. This is not an exhaustive list, just a few tidbits we thought would be helpful as a general reference guide, but please be aware that things are changing at such a rapid pace that what we know in the morning may be outdated by the afternoon. 

Taxes: The deadline for both filing and paying federal income taxes and taxes on self-employment income has been extended by 90-days, from April 15 to July 15, 2020, and interest will not accrue during those 90 days. Under the most recent guidance, there is no limit on the amount of payment that may be postponed (previously, non-corporate taxpayers could defer tax payment up to $1 million and corporate taxpayers can defer up to $10 million). The federal payment extension applies to both 2019 taxes owed as well as 2020 Q1 estimate payments that would ordinarily be due on April 15, but Q2 estimated payments that are due on June 15 are not deferred. An important note: as of yet, no extension has been granted for payment of other federal taxes, or for filing of information returns (i.e., Form 990, whose filing deadline remains May 15). Kentucky has followed suit, to an extent, extending the deadline to file (but not the deadline to pay) from April 15 to July 15. As of this writing it appears that interest will still accrue on any Kentucky state tax due and not paid by April 15. Another change to be aware of is that the contribution deadline for 2019 IRAs (including SEP IRAs) and HSAs has also been extended to July 15.

Contracts – Force Majeure / Acts of God: With so many businesses suspending operations, you can be sure there will be plenty of nonperformance on contracts. Think non-delivery of shipments, failing to build X number of widgets, or even failing to pay rent.  Under normal circumstances, nonperformance is grounds for one party to a contract to take action against (i.e., sue) the other. However, in the context of the COVID-19 being officially labeled a global pandemic and a national emergency having been declared, nonperformance may be excused by a “force majeure” or “Act of God” clause in a contract. If this might apply to your situation, you (and your attorney) should carefully review the terms of your contract as the wording is very important. Broader force majeure clauses may be interpreted to cover this type of situation or may specifically include global medical crises, however more narrow clauses may specifically exclude this type of situation.

Business Interruption Insurance: Many small businesses will be hit especially hard by this pandemic. Business owners may have business interruption insurance coverage that will pay out lost income and expenses incurred from a covered loss, but that coverage may not extend to disease outbreaks. Short-term disability policies may be eligible for a claim if employees are ordered to quarantine or shelter in place. Business owners should carefully review the language in their policies; while some policies may extend coverage to global pandemics, some specifically exclude coverage in this type of situation. 

Student Loans: As part of the national emergency declaration, President Trump announced that student loan payments would be suspended for 60-days and interest on student loans would be waived for the duration of the emergency. This policy is retroactive to March 13, 2020 and it applies to direct student loans, and FFEL and Perkins loans held by the federal government. It is important to note that this interest waiver only applies to those loans currently held by federal agencies, if you have refinanced your student loan with a private company, the interest waiver does not apply to you. While this policy is in effect you will still be required to make your full monthly payment. This does still present some potential opportunities. For example, you might consider “pausing” your federal student loan payments by putting them in forbearance, which is currently interest-free, then redirect those payments towards building a cash emergency fund or to other debts that are still accruing interest. This is a strategy that should be carefully evaluated on a case-by-case basis.

Scam Warning: Another new normal during these past several weeks is all the emails in your inbox from every company telling you about their response to COVID-19. While you are self-quarantining and practicing social distancing to help prevent catching the COVID-19, you should be weary of any links or attachments in those emails that may contain a computer virus. There is a report of a text message scam that contains a link that says it’s to download an app that tracks COVID-19 data, but in reality it gives the scammers access to all the data (i.e., pictures, texts, etc.) on your phone.   We have also heard of a scam email going around posing as the FDIC trying to scare people with liquidity issues into giving up their banking information. Stay vigilant and use common sense – if you wouldn’t click the link or type in the info during “normal” times, don’t start now.

Stay Positive: Americans are resilient. In our country’s history, we have been faced with many tough obstacles and we always fight through and come out on the other side. Stay positive and be a good neighbor during these times. If you see a safe and responsible opportunity to lend a helping hand to someone in need, do it. We were impressed by the caring neighbor who set up this table below. Remember that there is a light at the end of the tunnel, and we will make it through to the other side.