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Trump Declares National Emergency, Opens Door to Tax Relief

Posted on Mar. 16, 2020

President Trump declared a national emergency over the coronavirus, setting the stage for the IRS and Treasury to offer administrative tax relief.

Declaring an emergency enables the White House to “unleash the full power of the federal government,” Trump told reporters at a March 13 press conference, and in his letter declaring the emergency, Trump directed Treasury Secretary Steven Mnuchin “to provide tax relief from deadlines to Americans who have been adversely affected by the COVID-19 emergency, as appropriate.”

Mnuchin previously indicated that the administration is considering providing tax relief related to the coronavirus for some individuals and businesses, including extending tax deadlines. Several groups and lawmakers have called for similar relief.

At the press conference, Trump expressed dissatisfaction with the House’s coronavirus response legislative package, the Families First Coronavirus Response Act. Later that evening, however, the office of House Speaker Nancy Pelosi, D-Calif., announced that it had reached a deal with the Trump administration.

Legislative language had not been released at press time, but a letter announcing the agreement contained no tax provisions. The letter referred to provisions on paid leave, food security, and healthcare.

Trump had been insistent that lawmakers include a payroll tax cut through the end of the year as part of the relief package. “Only that will make a big difference!” he tweeted the morning of March 13.

Trump’s emergency declaration invokes the Stafford Act, intended to provide relief during federal disasters, and in so doing, he has the authority to delay filing and payment deadlines for up to a year under section 7508A, observed Daniel Hemel of the University of Chicago School of Law.

The extent of any tax relief — who is eligible and for how long — remains unclear. Neither the IRS nor Treasury responded to Tax Notes’ requests for comment by press time.

An IRS FAQ indicates that the Stafford Act allows the IRS to provide taxpayers and tax practitioners in federally designated disaster areas with tax relief, including extending deadlines for tax return filing and tax payments, waiving penalties for late payments and interest, and expediting amended tax return processing.

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