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IRS Defers Tax Payments Until July 15th!

IRS Defers Tax Payments Until July 15th!

In a press briefing Tuesday morning, March 17, 2020, Treasury Secretary Steven Mnuchin said that individual taxpayers who owe up to a million dollars in federal taxes can defer paying until July 15, while corporations can defer up to $10 million.

The Reason We’re Doing A Million Dollars Is Because
It Covers A Lot Of Pass-Through And Small Businesses,”

He Noted.
“All you have to do is file your taxes, you’ll automatically not get charged interest and penalties,” he said. “We encourage those Americans who can file their taxes to continue to file on April 15, because for many, you will get tax refunds, and we don’t want you to lose out on those refunds.”

Mnuchin made a point of saying that taxpayers could still file for extension, which would allow them to defer filing and payment until October 15. “We’re not taking that right away,” he said.

No Specific Mention Was Made Of Changing
The Filing Deadline.

“This is disappointing,” said Neil Fishman, president of the National Conference of CPA Practitioners. “From everything that was coming out, we expected they were going to grant a filing extension. But they’re not granting a filing extension, they’re granting a payment extension.”

“This is not helping people with their tax returns,” he continued. “I’ve got clients in a senior facility, and they’re all on lockdown, I was going to go see them this week, but they’re not letting anybody in, not even family. If the person is quarantined, they can’t sign an authorization form. If they owe money, they can’t sign a check.” The promise to waive “all penalties and interest” raised some questions for some tax experts.

“If I don’t file for an extension but pay within next 90-day period, the question is, will they waive the failure to file penalty?” asked Roger Harris, president of Padgett Business Services and a past chair of the IRS Advisory Council.
“They’re waiving all penalties for not paying, but what about for not filing? Some in media are saying he waived both, but that’s not what I heard him say. Does this waiver also apply to the estimated tax payment due on April 15 by some taxpayers.”

Harris said that he believes the reason the government is only talking about extending payments is that it doesn’t put pressure on the states to change their filing dates.
“By Just Extending The Payment Date, It Doesn’t Force States To Consider Changing Their Filing Date,” He Explained.
“They just have to decide if they want to defer payment, penalty and interest free, or not.”

Delaying payment requirements will give businesses and individuals nearly three more months to meet their IRS obligations, potentially lessening cash-flow issues that some businesses are facing as many people stay home and spend less money on dining out, entertainment and transportation.

“This is a commonsense step to afford individual Americans and businesses access to financial resources they need during this time of economic and social disruption,” Senate Finance Committee Chairman Chuck Grassley said in a statement.
Wealthier individuals, ranging from the upper-middle class to the top 1%, could benefit the most from this move because they are more likely to owe the government money and be able to wait until the filing deadline to submit their returns, said John Koskinen, a former IRS commissioner. 
Nearly 68 million individuals had already filed their tax returns as of March 6, according to the most recent statistics from the IRS. That’s about 45% of the returns the agency expects to receive this year.
“For a lot of people it makes sense to stick to the original schedule,” said Meredith Tucker, a principal at accounting firm Kaufman Rossin. “Don’t just kick the can down the road if there is no benefit.”
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Read more at: Tax Times blog

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