The CARES Act Tax Developments

The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act relief package came in response to the novel coronavirus (COVID-19) outbreak. The act makes several modifications to current tax law to bring financial relief to US businesses, including modifications that present opportunities for businesses to obtain cash refunds for taxes previously paid. We present these provisions in the context of our transacting clients and how parties to transactions should be thinking about these new, taxpayer-favorable changes. Certain of these provisions are contingent on whether or not a taxpayer participates in certain loan and grant programs. A holistic review of a company’s cash position, including thirteen-week cash projections, should model the variety of available cash accumulation strategies that are available under the CARES Act.

For many of these provisions, we anticipate more guidance from the Internal Revenue Service (IRS) and Treasury Department, and we are monitoring closely the progress of such guidance.