Small Business Taxes & ManagementTM--Copyright 2020, A/N Group, Inc.
Update--03/20/20--Steven Mnuchin, Secretary of the Treasury announced on March 20th the April 15 filing date will be extended to July 15 for both individual and business tax returns. As a result, neither payment nor a return is due till July 15. While not a surprising move under the circumstances, it is welcomed by both professional tax preparers and individuals who have not yet filed. You can, of course, file at any time to get a refund, or just file to cross it off your to do list.
Taxpayers with more complicated returns and those that include pass-through entities might consider delaying the actual filing until further information on what additional relief may be available is released. Delayiong would also provide you with more information on how best to make any elections on your return.
Taxpayers should also keep in mind that most states use the Federal return as a basis for computing their taxes. So far only Alabama, California, Connecticut, Indiana, Iowa, Oregon and South Carolina have extended their deadlines. It is highly likely most of the other states will follow suit.
The IRS is expected to issue more guidance either on Friday, March 20th, or Monday, March 23.
Update--03/18/20--The IRS has clarified that estimated tax payments due April 15 will also be automatically extended to July 15. However, second quarter estimates due June 15 were not mentioned and, presumably, are not deferred at this time.
A number of tax and accounting groups have urged the IRS to postpone the April 15th filing date. This growing groundswell may produce results, but as of now, returns are still due April 15th.
Original Article While many professionals expected the Treasury to delay the tax filing deadline as a result of the coronvirus outbreak, they have yet to do so. They have, however, provided some relief by allowing individuals to defer up to $1 million in payments for 90 days from the April 15th due date without incurring interest or penalties. The same benefit is available to corporations, but the amount of tax that can be deferred under the plan is $10 million.
While that will may help taxpayers' immediate cash flow issues, it doesn't solve the problem of getting a return prepared. The problem is more acute for business owners and businesses that may be short of staff or where their outside tax preparer is overwhelmed. The easiest way out is to file an extension request, but if the return isn't filed until, say September 1, a taxpayer could owe penalties and/or interest from July 15th to September 1. In addition, most state income tax returns are due April 15th. Extensions are available, but at this time most states don't have a provision for abating interest and penalties for the same 90-day period.
It's likely the IRS and Treasury (and state tax departments) will issue more guidance quickly. Virtually everything about the coronavirus is fast moving and requires unique solutions. It's very possible that there will be additional relief from the Treasury and from Congress. The Tax Cuts and Jobs Act repealed the provision that allowed corporations and individuals to carry back losses for two years, thereby allowing taxpayers to recoup taxes paid in earlier years. That provision might be reinstated. Also possible is relief from penalties for underpayment of estimated taxes.
Copyright 2020 by A/N Group, Inc. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional should be sought. The information is not necessarily a complete summary of all materials on the subject. Copyright is not claimed on material from U.S. Government sources.--ISSN 1089-1536
--Last Update 03/20/20