If you have access to the outside world at all, you are probably fully aware of the coronavirus that has been sweeping the world. In an effort to keep you informed, we’ve gathered some information on what this could mean for this tax filing season and what we’re doing to prepare.
Treasury Considers Extending April 15 Tax Deadline
Treasury Secretary Steven Mnuchin told lawmakers during a House Appropriations Committee hearing on Wednesday, March 11, 2020, that he would support extending the tax deadline beyond April 15th. He added that the delay would offer a “good stimulus” for small businesses and individuals that have been impacted by the coronavirus.
Treasury officials had been discussing the idea of extending the Internal Revenue Service’s payment deadline as the Trump administration considered measures to relieve economic pressures. Mnuchin did mention his department can delay the payments without permission from Congress, and that he has been looking for ways to fund the tax deadline extension.
Is this typical? Though, the April 15th deadline is outlined in the tax code; it does include exceptions for when the day falls on a local holiday or weekend. It also gives the Treasury Secretary latitude to delay the deadline in disaster situations.
However, there are some “complex considerations.” Businesses that are organized as partnerships must file their returns by March 15, and many businesses and self-employed individuals face a second April 15th deadline for paying estimated quarterly taxes. The latter deadline could cause cash-flow issues for businesses hard hit by a coronavirus-related downturn.
President Trump Calls for Deferral of Tax Payments
In an address from the Oval Office on Wednesday, March 11, 2020, President Trump said he would allow individuals and businesses to “defer tax payments without interest or penalties,” and he urged Congress to cut payroll taxes as part of providing relief during the coronavirus pandemic.
“Using emergency authority, I will be instructing the Treasury Department to defer tax payments, without interest or penalties, for certain individuals and businesses negatively impacted,” stated President Trump during his address to the nation. “This action will provide more than $200 billion of additional liquidity to the economy. Finally, I am calling on Congress to provide Americans with immediate payroll tax relief. Hopefully they will consider this very strongly.”
AICPA Calls for Tax Filing Relief
Amid the coronavirus pandemic, the American Institute of CPAs (AICPA) called for the Treasury Department and the IRS to provide relief to all taxpayers in light of the uncertainty and challenges caused by the COVID-19 pandemic. They followed up by laying out some recommendations that would provide “extensive relief to millions of individuals and businesses.” Here’s what they recommended:
- Broad Relief: Extend certain deadlines falling on or after March 15, 2020, and before October 15, 2020 to give individuals additional time to file and make payments through October 15, 2020.
- Automatic Extension: Provide an automatic extension to October 15, 2020, without the need to file any forms or request an extension.
- Penalties & Interest:
- Waive late payment penalties if at least 70% of an individual’s current tax due is paid by April 15, 2020.
- Waive interest through October 15, 2020.
- Other Relief:
- Waive underpayment penalties for 2020 estimated tax payments if paid by September 15, 2020.
- Extend the IRA contribution deadline.
- Broad Relief: Extend certain deadlines falling on or after March 15, 2020 and before October 15, 2020, to give businesses additional time to file and make payments through October 15, 2020.
- Automatic Extension: Provide an automatic extension without the need to file any forms or request an extension.
- Penalties & Interest: Waive late payment penalties and interest through October 15, 2020.
- Other Relief: Provide appropriate relief for all businesses and tax-exempt organizations regarding elections and filings (including payroll, excise tax, etc.).
Information from AICPA.org. Here’s the full press release.
Tax Professionals Prepare for the Coronavirus Effects
With the April 15th deadline just a few weeks away, it’s important to know our team of tax and accounting professionals are still hard at work with business as usual, and clients will be notified of any disruptions in the workplace that would affect workflow. As the IRS continues to take a watch-and-see approach, we will stay on top of the news and keep you informed as needed.
While the coronavirus pandemic is ever-evolving and new information continues to surface, please know we will work with you to accommodate your needs. We will be in office for the foreseeable future, but you are always able to reach us via phone or email. Your tax documents can be uploaded online via your client portal, and most tax documents can be signed via e-signature; allowing you to stay home if needed. If you have any questions or concerns, do not hesitate to reach out.