While tax filers now have until July 15 to pay their 2019 tax bills, those who don’t owe the IRS money still must complete their returns by the original April 15 deadline.
Individuals can defer up to $1 million of tax liability while corporations get an extension on up to $10 million, Treasury Secretary Steve Mnuchin said at a Tuesday news conference.
“All you have to do is file your taxes,” he said. “You’ll automatically not get charged interest and penalties.”
However, Mnuchin suggested that Americans should stick to the original deadline, if possible.
“We 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,” Mnuchin said.
The payment extension, which affects millions of taxpayers, is part of the Trump administration’s effort to curb the brutal economic effects of the coronavirus pandemic.
If you defer payments on your income taxes for up to 90 days after the April 15 filing deadline, any interest or penalties will be waived.
Last year, of the tax returns processed, more than 73% of Americans received refunds, with the average amount totaling $2,725.
Alan Gubernick, a partner with St. Clair CPA Solutions accounting firm in Conshohocken, is advising clients to try to file as soon as possible -- especially if they’re owed a refund.
What about estimated 2020 payments for individuals and businesses? Also delayed until July 15.
For those receiving or applying for unemployment, “benefits are not taxable for Pennsylvania and New Jersey, but Delaware does tax unemployment,” he said.
Again, if you’re due a refund, “there’s no reason to wait. File your taxes now,” said Eric Bronnenkant, the head of tax at online financial advisor Betterment.
Others said there are so few details that “we should continue as if there is still an April 15 reporting requirement. We don’t know if extensions need to be filed, how the $1 million works for 2019 and 2020,” and other questions, said Martin Abo, a CPA in Moorestown.
Drucker & Scaccetti accounting firm set up a COVID-19 information page, with a link at this online address: https://www.taxwarriors.com/en-us/covid-19-tax-resource-center-.
Questions abound: If taxpayers owe more than $1 million, does that mean they can reduce their payment by $1 million or “are they boxed out of the relief completely?” asked Rosalind Sutch with Drucker & Scaccetti. Also, “how do taxpayers handle 2020 estimates due April 15 and June 15 -- before the July 15 extended due date for 2019 payments?”
The American Institute of CPAs’ president and CEO, Barry Melancon criticized the lack of a delay in filing.
“Unfortunately, this important payment relief does not apply to the filing of tax returns. 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.”
It’s impossible for every taxpayer and their tax adviser to prepare returns in this environment, he added.
"Even the 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 15th filing deadline and providing more clarity on the details of recent relief actions.”
In response to the COVID-19 pandemic, the Fox School of Business has moved its Volunteer Income Tax Assistance (VITA) program online.
The program will now be facilitated through the use of Zoom Video Communications technology and TUsafesend, a resource that makes it easy to securely send and receive files from within and outside the university.
A news release with more details can be viewed here.
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