Individuals and businesses will have an additional 90 days to pay their taxes under coronavirus-related relief announced by the Treasury Department and the White House.
In a March 17 press conference with President Donald Trump, Treasury Secretary Steven Mnuchin said individual taxpayers who owe up to $1 million in federal taxes can delay paying until July 15, while businesses can defer up to $10 million.
“All you have to do is file your taxes,” Mnuchin said. “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 added that taxpayers could defer paying their tax liabilities until Oct. 15 by filing for an extension.
“The filing deadline for tax returns remains April 15, 2020,” the IRS stated in a bulletin published on March 18. “The IRS urges taxpayers who are owed a refund to file as quickly as possible. For those who can’t file by the April 15, 2020 deadline, the IRS reminds individual taxpayers that everyone is eligible to request a six-month extension to file their return.”
What does this payment relief include?
The IRS outlined exact details about what the tax payment relief includes. They are included here verbatim:
Individuals: Income tax payment deadlines for individual returns, with a due date of April 15, 2020, are being automatically extended until July 15, 2020, for up to $1 million of their 2019 tax due. This payment relief applies to all individual returns, including self-employed individuals, and all entities other than C corporations, such as trusts or estates. IRS will automatically provide this relief to taxpayers. Taxpayers do not need to file any additional forms or call the IRS to qualify for this relief.
Corporations: For C corporations, income tax payment deadlines are being automatically extended until July 15, 2020, for up to $10 million of their 2019 tax due.
This relief also includes estimated tax payments for tax year 2020 that are due on April 15, 2020.
Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. If you file your tax return or request an extension of time to file by April 15, 2020, you will automatically avoid interest and penalties on the taxes paid by July 15.
Relief for Maryland taxpayers
Maryland Comptroller Peter Franchot, meanwhile, announced that there will be a 90-day extension of the April 15 deadline for federal income tax payments. “No interest or penalty for late payments will be imposed if 2019 tax payments are made by July 15, 2020,” Franchot said.
Franchot has previously announced an extension for business-related tax filing deadlines.
“Right now, Maryland taxpayers and businesses must stay focused on their health and keeping their lights on, both in their homes and businesses,” Franchot said. “Extending the due date for Maryland state individual and business income tax payments helps us keep cash flowing in our economy and into employees’ bank accounts.”
For other state tax developments related to the pandemic, see the AICPA’s list here.
The apparent decision to not grant a filing extension came as a disappointment to some in the profession.
“On (March 16), we learned that the administration is allowing certain taxpayers to delay tax payments for 90 days and is providing interest and penalty relief, and today it released its formal notice. Unfortunately, this important payment relief does not apply to the filing of tax returns,” said AICPA President and CEO Barry Melancon. “The concern and confusion related to coronavirus is causing cities across the country to shut businesses down, and Treasury’s recent decisions do not reflect the real-world difficulties tax practitioners and their clients are experiencing.
“The AICPA understands the need for economic stimulus and, if possible, those who can file and get refunds should do so now,” Melancon continued. “However, it is impossible for every taxpayer and their tax adviser to prepare returns in this environment. Nearly 60 percent of all taxpayers turn to a tax practitioner to prepare and file their tax returns, and individual and business tax filing deadlines are fast approaching. Even the relatively simple process of filing an extension form requires calculations based on data and information from the taxpayer. Given the current environment, this extension process is impossible for many taxpayers. Treasury must act immediately by extending the April 15 filing deadline and providing more clarity on the details of recent relief actions.”
“We understand that these are uncertain and challenging times for the Department of the Treasury,” added Edward Karl, CPA, the AICPA’s vice president of tax policy and advocacy. “In the past, when relief was provided for a disaster, taxpayers have typically received payment and filing relief together. It is very surprising that we have not yet seen filing relief given the severity of the coronavirus pandemic’s impact on our nation. We continue to communicate the need for filing relief and clarity to Treasury and hope to see action soon.”
Single-audit submission deadline extended for certain entities
In a related development, a recent memo from the U.S. Office of Management and Budget led to some confusion among members of the profession.
The OMB has indeed extended the single-audit submission deadline, but only for certain entities. The extension does not apply to all recipients.
In an alert to members of its Governmental Audit Quality Center, the AICPA wrote the following:
“We discussed the memo with OMB staff to ensure an appropriate understanding and are providing you with a summary of that discussion to ensure the audit community is aware for purposes of discussions with your clients.
“OMB confirmed the following:
- “The memo is intended to provide guidance to federal agencies relating to areas where relief may be provided to certain recipients.
- “The memo is not instructing federal agencies to provide a blanket waiver for all recipients impacted by COVID-19. Instead, its guidance primarily relates to recipients receiving funds disbursed from the approximately $9 billion in emergency supplemental appropriations for coronavirus preparation and response (H.R.6074). Note that there could be cases where agencies may decide to apply the guidance in the memorandum for existing awards that are deemed by the agency to be for continued research and services necessary to carry out the emergency response relating to COVID-19.
- Federal agencies are expected to issue their own guidance implementing the provisions of the OMB memo. The Department of Health and Human Services is the primary funder of awards made under H.R. 6074.
- “OMB understands that other recipients that are not receiving H.R.6074 funds may have operations that have been adversely impacted by COVID-19. OMB is working on additional guidance to address these situations, including whether any flexibility will be given on single audit submissions that are late due to these circumstances.”