A major disconnect occurred earlier in week when the Treasury department announced that the deadline for paying any final federal income tax liabilities for 2019 was extended until July 15, 2020. The original due date was April 15, as it has been for decades. The temporary reprieve also extended to those amounts taxpayers would have to pay for 2020 first-quarter estimated income taxes. The announcement did not address relief for second-quarter estimated tax payments due June 15, one month prior to the extended payment deadline.
The extension, of course, was one of the relief provisions provided by the administration in response to the heavy weight that national and state responses to the coronavirus has put on our economy. While payment date extension was welcome news and will no doubt have a positive effect on economic recovery once the health risk has passed, the Treasury failed to extend the actual deadline for filing the income tax returns beyond April 15, just weeks away.
The Internal Revenue Service has advocated for extending the due date for filing, as well, but Treasury Secretary Mnuchin has resisted, not wishing to defer payments due to taxpayers expecting refunds for 2019. The reason behind his resistance is understandable, as the administration would like to avoid taxpayer procrastination in filing with the hope that refunded dollars will provide an earlier boost to the economy. However, given the current circumstances in which taxpayers find themselves, the “non-health-related” challenges of filing a tax return are far from the highest priority for most individuals. Finally, the tax professional community has been severely affected by safety measures closing offices, and the functional capabilities of many firms are being severely tested.
In light of these issues, taxpayers and tax professionals alike were surprised and disappointed that the extension of time for payment was not accompanied by an automatic extension of time to file. The American Society of Certified Public Accountants (AICPA) has been pushing for the addition of an extended due date for weeks.
On March 19, 2020, Senator John Thune, (R-SD) introduced the Tax Filing Relief for America Act (Senate bill 3535) which aims to have the filing deadline coincide with the new July 15, 2020 payment deadline for 2019 income taxes. The bill was co-sponsored by Senators Steve Daines (R-MT), Angus King (I-ME), Richard Burr (R-NC) and Chris Van Hollen (D-MD).
The legislation would provide greater clarity to taxpayers and allow those who need to travel to a secondary location to acquire documents or meet with an accountant to follow the CDC’s ongoing guidelines with respect to the coronavirus outbreak. It would also preserve the right of taxpayers who are owed refunds to file their tax returns and get their hard-earned money back today.
In introducing the bill, Sen. Thune noted, “Treasury’s decision to extend the tax payment deadline from April 15 to July 15 was an important first step, but it only makes sense to also extend the tax filing deadline itself.” He further noted, “There’s enough confusion amid this outbreak as it is, so I believe it’s incumbent upon Congress to provide as much clarity and relief as possible to American families. While I’m working with my colleagues on additional swift and bold action to respond to the ongoing coronavirus outbreak, this is the least we can do, and I hope my colleagues will support this effort.”
During this unprecedented time, taxpayers and tax practitioners are finding it increasingly difficult to comply with upcoming filing deadlines,” said Edward Karl, CPA and vice president of tax policy and advocacy for the Association of International Certified Public Accountants. “Businesses and individuals struggling with coronavirus-related issues should not also be concerned with meeting upcoming tax filing deadlines. The AICPA is grateful to Senator Thune for his leadership on this critical issue and we support his efforts to provide Americans with much-needed tax filing relief in the midst of this national emergency.” Read the AICPA’s letter in support of the Bill
At Grossman Yanak & Ford LLP, we view the introduction of Senate Bill 3535 as an important step in allowing taxpayers to focus on the necessary steps to protecting loved ones and themselves. We expect that this very “common sense” legislation will move quickly through Congress and onto the President’s desk within a week’s time.We will, of course, post updates regularly.