The current COVID-19 pandemic highlights the vulnerabilities in the United States’ business sector. With the current lockdown in place, it shows how massive our economy can plunge when almost all establishments shut down. This problem shows us that preparation is key, as these kinds of economic lockdowns are no longer just concepts. 

 All sectors must work hand-in-hand for all of us to survive the pandemic economically. Businesses need to understand that both they and their employees are struggling during the lockdown. This requires them to commit some sacrifices, such as providing paid absences and ensuring job security.

On the government side, the best help they can provide businesses is tax reliefs and financial aids. Taxes, such as those applicable to real estates, can hurt companies that do not have a steady source of income during the pandemic. By limiting or eliminating these taxes temporarily, businesses can have a significant amount of savings.

The Internal Revenue Service provided some tax reliefs to a wide range of businesses to help them survive the pandemic. One example would be the postponement of taxes due on June 15 to July 15. The relief also gives accountants more time to finish tax returns that they were unable to accomplish during the lockdown.

You can read more on these tax reliefs with this article Alistair M. Nevius posted on the Journal of Accountancy.

IRS Grants Broad Coronavirus-Related Tax Relief

Taxpayers were granted additional, broad tax filing and payment deadline relief by the IRS late on Thursday, in line with relief requested by the AICPA over the past several weeks amid the coronavirus pandemic. 

The new relief, issued in Notice 2020-23, applies to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020, including individuals, trusts, estates, corporations, and other noncorporate tax filers, and that period will be disregarded by the IRS in calculating any interest, penalty, or addition to tax for failure to file the forms specified in the notice. Click here to read more…

Besides problems with taxes, businesses also face other issues with their accounting. For example, many lessors are offering to provide lease concessions to their tenants. They, however, have never provided such compromise to their tenants. This problem makes them unfamiliar with the proper way of accounting for these concessions.

Bank and other lending institutions are also facing issues regarding interest recognition. This problem is most evident in those that offered payment holidays to their borrowers. Fortunately, the Financial Accounting Standards Board provided clarifications for these issues. You can read more about these issues and clarifications on this article Ken Tysiac provided on the Journal of Accountancy website.

FASB staff clarifies lease modifications, other pandemic accounting issues

Accounting challenges related to the coronavirus pandemic have resulted in numerous questions for FASB from financial statement preparers and practitioners. 

Shayne Kuhaneck, FASB’s acting technical director, answered some of these questions during the board’s meeting Wednesday. He shed light on issues related to lease modifications, interest income, hedge accounting, and other issues. Click here to read more…

Ken Tysiac’s article shows that accounting rules are not set in stone. Authorities may modify them in situations that demand it. The COVID pandemic best exemplifies this idea. It also proves that businesses, accounting authorities, and the government need to work together for all of us to survive it.