SPONSORED:

Lawmakers welcome Treasury move to extend tax deadlines

Lawmakers welcome Treasury move to extend tax deadlines
© Getty Images

Treasury Secretary Steven MnuchinSteven Terner MnuchinOn The Money: Initial jobless claims rise for 2nd week | Dow dips below 30K | Mnuchin draws fire for COVID-19 relief move | Manhattan DA appeals dismissal of Manafort charges Mnuchin to put 5B in COVID-19 relief funds beyond successor's reach The Hill's Morning Report - Presented by the UAE Embassy in Washington, DC - Trump OKs transition; Biden taps Treasury, State experience MORE on Tuesday provided more information about the administration’s plan to extend tax deadlines due to the coronavirus, a development welcomed by lawmakers on both sides of the aisle.

Mnuchin said during a press conference at the White House that individuals who owe the IRS money will be able to defer up to $1 million in payments for 90 days without interest or penalties, while corporations will be able to defer up to $10 million. 

Lawmakers and other stakeholders spoke favorably about the move, saying that extensions will be beneficial for individuals and small businesses that are seeing a loss of income due to the pandemic.

ADVERTISEMENT

Still, Mnuchin’s comments leave some unanswered questions, and lawmakers and tax experts are eagerly awaiting formal guidance from the Treasury Department and IRS.

“I think the secretary’s statement is encouraging,” said Nicole Kaeding, a vice president at the right-leaning National Taxpayers Union Foundation. “I think this is a good step to handling the economic crisis that we’re in.”

The coronavirus pandemic has resulted in many businesses closing or scaling back their operations, and has led to workers facing reduced hours and layoffs. 

The Trump administration has been interested in delaying tax deadlines in order to help individuals and businesses that find themselves with limited funds.

The president said in a March 11 oval office address that he would be “instructing the Treasury Department to defer tax payments, without interest or penalties, for certain individuals and businesses negatively impacted.”

Mnuchin on Tuesday provided new specifics about the length of extensions and the dollar amount of payments that can be extended. He argued that such extensions could inject $300 billion of liquidity into the economy.

ADVERTISEMENT

“That’s ... an enormous amount of liquidity in the system," he said.

Mnuchin also encouraged people who are able to file their tax returns by the April 15 deadline to still do so, since most people receive tax refunds.

“We don't want you to lose out on those tax refunds,” he said.

About 68 million individual tax returns have been filed through March 6, out of more than 150 million that are expected to be filed this year. Typically, about 70 percent of tax returns filed by individuals claim refunds. Taxpayers that owe money to the IRS typically file toward the end of the filing season.

Prior to Tuesday’s announcement, lawmakers on both sides of the aisle had sent letters to Treasury and the IRS in recent days to urge agencies to provide more flexibility and relief for taxpayers.

Lawmakers were positive about Mnuchin’s comments.

“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 GrassleyCharles (Chuck) Ernest GrassleyRep. Rick Allen tests positive for COVID-19 On The Money: Biden to nominate Yellen for Treasury secretary | 'COVID cliff' looms | Democrats face pressure to back smaller stimulus Loeffler to continue to self-isolate after conflicting COVID-19 test results MORE (R-Iowa) said in a statement. “This will allow individual filers, small businesses and corporations more financial flexibility in the months ahead as the country faces continued fallout from the coronavirus.”

Sen. Ron WydenRonald (Ron) Lee WydenTwo more parting shots from Trump aimed squarely at disabled workers On The Money: Push for student loan forgiveness puts Biden in tight spot | Trump is wild card as shutdown fears grow | Mnuchin asks Fed to return 5 billion in unspent COVID emergency funds Grassley, Wyden criticize Treasury guidance concerning PPP loans MORE (D-Ore.), the top Democrat on the Finance Committee, also said he backed Mnuchin’s move.

“Postponing tax payments is a commonsense step to keep money in folks’ pockets and ease cash flow problems for companies,” he said.

Rep. Kevin BradyKevin Patrick BradyOn The Money: Biden, Democratic leaders push for lame-duck coronavirus deal | Business groups shudder at Sanders as Labor secretary | Congress could pass retirement bill as soon as this year Top Democrat: Congress could pass retirement bill as soon as this year Momentum grows for bipartisan retirement bill in divided Congress MORE (R-Texas), the top Republican on the House Ways and Means Committee, said that “this tax relief will help ensure that families and small businesses have the cash they need as we work to fight this global pandemic.”

But there are still some areas where lawmakers and tax experts would like to see more clarity and guidance.

Stakeholders said that it’s important for the deadline to file tax returns to be extended, in addition to the extension of the deadline for tax payments that Mnuchin announced.

Steve Taylor, a senior vice president at United Way Worldwide, said that low-income taxpayers need an extension of the filing deadline in order to ensure their returns are prepared correctly. Many free tax-preparation sites for underserved populations in the volunteer income tax assistance (VITA) program — a partnership between the IRS and nonprofits — are currently shut down because of the coronavirus, he said.

“A deferral of tax payment doesn’t help those [low-income] people,” Taylor said. “They need help with tax filing.”

A spokesperson for House Ways and Means Committee Democrats said that Mnuchin’s comments are “welcome relief” but that there is “more we’d like to know though, including how the IRS will address challenges for low-income and elderly taxpayers who don’t have access to crucial free tax preparation services like VITA and [tax counseling for the elderly] due to coronavirus.”

Tax experts also have other questions about how the deferral will work, such as whether it will apply just to 2019 taxes or whether it also applies to quarterly estimated tax payments for 2020. Preparers said that it’s important for Treasury and the IRS to issue formal guidance that they can rely on when advising their clients.

“Tax professionals need guidance in order to take a position on a return,” said Robert Kerr, executive vice president of the National Association for Enrolled Agents. “While this is a fluid circumstance, we still have need for some written guidance.”