The federal response to the COVID-19 crisis runs, in large part, through the tax system. Congress and the Internal Revenue Service have changed the tax rules to enhance the short-term liquidity of companies and their workers, including delays in tax payments, credits or loans for employee retention, corporate tax changes, and mandatory leave and support payments to individuals. Taking advantage of these opportunities requires taxpayers to make decisions and take action quickly. Companies are calling on their corporate tax departments to provide real time answers in an environment where business needs are changing and immediate, and IRS guidance is limited. Down the road, the IRS will examine compliance with the new rules, and controversies are certain to arise. Additional tax changes are likely in the near, medium, and long term, and companies will want to be heard in coming debates over tax policy.

In light of the COVID-19 crisis, corporate tax departments should consider the following:

  • Recent tax changes that can increase a company’s liquidity.
  • Impacts of the current crisis on the company’s longer-term tax planning and policies.
  • Actions that can be taken now to mitigate tax controversy risks down the road.
  • The coming debate over increased taxes to pay the costs of the crisis.

Since the crisis began, Crowell & Moring’s attorneys have been carefully tracking and analyzing COVID-19 tax relief, as well as following changes in the corporate tax provisions and their potential unintended consequences. We have advised numerous clients on the employee retention and Families First credits, thoroughly exploring nuances of these provisions as well as submitting questions to the IRS for potential future guidance. Our team of seasoned tax attorneys includes former Treasury, IRS Chief Counsel, and Department of Justice, Tax Division officials, as well as a former member of the IRS/DOJ Employment Tax Task Force. The scope of our lawyers’ experience brings a depth of understanding regarding IRS enforcement that makes us particularly effective in the planning and analysis stage, as well as the defense phase. We have been actively involved as our clients navigate these new provisions, and possess the experience and skill to defend the positions taken in audit and litigation if necessary.