On Tuesday, Treasury Secretary Steven Mnuchin announced that the deadline for US taxpayers to pay income taxes for 2019 will be pushed back by 90 days in an effort to soften the financial fallout from the coronavirus outbreak. The reprieve applies for up to $1 million in taxes owed, and would cover many pass-through entities and small businesses, he said.
He also indicated that corporate filers would receive the three-month extension to pay amounts due on up to $10 million in taxes owed.
What does this mean for you?
The deadline for timely filed returns is still April 15, 2020, and Mnuchin said the government would encourage those Americans “who can file their taxes to continue to file their taxes on April 15 because for many Americans, you will get tax refunds. We don’t want you to lose out on those tax refunds, we want you to make sure you get them. Many people do this electronically, which is easy for them, and easy for the IRS.”
So, you should still file your 2019 income tax return as soon as possible – especially if you’re due a refund and need the cash in this uncertain time. The IRS will continue to issue refunds by direct deposit or check.
If you want to take advantage of the extended payment offer, you must either 1) file your tax return or 2) file for an extension by April 15, 2020.
During the three-month deferral period (i.e. before July 15, 2020), taxpayers won’t be subject to interest or failure to pay penalties. Failure to file penalties will, however, still apply if a return is not filed by the usual deadline or an extension is not properly submitted.
The federal government is deferring $300 billion in tax payments with this announcement; however, you should still familiarize yourself with your own state’s position. Many states have not officially extended the payment deadline, but they typically conform to the IRS rules. This AICPA chart shows the actions states have taken thus far. It will be updated daily during the coronavirus pandemic.
In the end, you – the taxpayer – and your tax professional are responsible for filing and paying your taxes in a timely and accurate fashion. Please contact our office (virtually or via phone) for more information and to discuss your options this tax season.