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Government Provides Relief for Those Impacted by COVID-19 Travel Disruptions

Posted by : and on : May 19, 2020 | 8:00 am

Are you or your employees stuck in a non-U.S. country due to COVID-19? If the answer is yes, the federal government is offering relief for "temporary activities" that could otherwise give rise to foreign branch reporting (IRS Form 8858) and related issues.

 

On May 7, 2020, Treasury and the Internal Revenue Service (the “IRS”) released Revenue Procedure 2020-30 which provides relief where foreign branch separate unit issues might otherwise arise. When employees are tied up or restricted in their travels due to COVID-19, taxpayers can exclude "temporary activities" performed in a non-U.S. country provided the following conditions are met:

 

  1. The activities are conducted by individual(s) in a non-U.S. country during any single consecutive period up to 60 days the taxpayer elects;
  2. The individual(s) conducting the activity are temporarily present in the non-U.S. country during the selected period; and
  3. The activities would not have been conducted in the foreign country but for the COVID-19 emergency travel disruptions.

Thus, if you find that your employees are stuck sheltering-in place, unable to fly home and having to work in a non-U.S. country, you have some room here to avoid foreign branch issues. Maintaining the facts in good contemporaneous written form for the period one wants to be availed of this exemption is required, and should be on-hand if the IRS requests.

 

Additionally, the IRS has offered some Permanent Establishment (“PE”) threshold relief for non-resident alien individuals and foreign businesses tied up or restricted in their travels due to COVID-19. The IRS is providing a 60-day exemption period between February 1, 2020 and April 1, 2020. Any person or business that seeks such relief must document and otherwise have the narrative in good contemporaneous written form for the period one wants to be availed of this exemption. The IRS has provided additional information regarding travel disruptions on its website.

 

Michael R. Pearson

Director, International Tax

312.638.2910

MPearson@fgmk.com

 

The summary information in this document is being provided for education purposes only. Recipients may not rely  on this summary other than for the purpose intended, and the contents should not be construed as accounting, tax, investment, or legal advice. We encourage any recipients to contact the authors for any inquiries regarding the contents. FGMK (and its related entities and partners) shall not be responsible for any loss incurred by any person that relies on this publication.

 

About FGMK

 

FGMK is a leading professional services firm providing assurance, tax and advisory services to privately held businesses, global public companies, entrepreneurs, high-net-worth individuals and not-for-profit organizations. FGMK is among the largest accounting firms in Chicago and one of the top ranked accounting firms in the United States. For over 50 years, FGMK has recommended strategies that give our clients a competitive edge. Our value proposition is to offer clients a hands-on operating model, with our most senior professionals actively involved in client service delivery.