IRS deadline news
In a historic move, on March 19, the IRS extended the April 15 tax payment deadline to July 15 this year for many people.
The American Institute of CPAs (AICPA) had encouraged the Treasury to extend the filing deadline and expressed disappointment that the Treasury failed to do so.
Fortunately, the next day, Treasury Secretary Steven Mnuchin announced that the filing deadline has also been extended to July 15. The move is the latest in a series of highly unusual, emergency measures to deal with the financial fallout of the coronavirus pandemic.
Mnuchin said the extension was ordered by President Donald Trump and will give “all taxpayers and business this additional time” to file returns and make tax payments “without interest or penalties.”
Individual tax returns are being extended for returns up to $1 million.
Corporations are exempted to the new date for up to $10 million of their tax 2019 tax due. The IRS estimated that the announcement would result in about $300 billion in additional liquidity.
The relief also includes estimated tax payments for the tax year 2020 that are due on April 15, 2020. However, the second estimated payment is due June 15, 2020, and the IRS has not yet indicated whether that payment will be deferred. If it is not deferred, two estimated payments will be due on June 15, 2020.
The relief also applies to trusts and estates.
The coronavirus, created a problem since nearly 60% of all taxpayers rely on a tax practitioner to prepare their tax returns. Many taxpayers would not want to risk getting infected from the virus by visiting a tax professional. In some states, accounting offices have already been ordered to shut down.
At this time, no one knows how long the threat of the coronavirus will last. If it lasts beyond July 15, you may want to consider filing an extension. Extensions are granted by the IRS automatically when requested.
In my experience, I have encountered clients who were hesitant to file an extension. Many clients erroneously because they believed that it would increase their chance of being audited or thought that the IRS would be mad. It’s simply not true.
This is like thinking the police will be mad if you take the interstate. The IRS doesn’t care anymore whether you file for an extension than the police care if you take the interstate. Everyone is entitled to file an extension, and the IRS doesn’t care. There was a time when you were less likely to be audited if you filed an extension, but this is no longer true. Filing an extension does not increase your chance of being audited.
If you are concerned about the coronavirus as the July 15 deadline approaches, you should consider all of your available options.
David Zubler is a tax accountant and an Enrolled Agent in East Tennessee, the author of four tax books, and a philanthropist. All of his proceeds from the books go to a charitable foundation he created for underprivileged children. He is also the founder of Your Tax Care which provides tax education. David can be reached for questions and consultation at yourtaxcare.com.