IRS releases guidance on deferring tax payments due to coronavirus
The Treasury Department and IRS on Wednesday released guidance on deferring tax payments due to the coronavirus, providing further details for taxpayers and tax preparers.
The release of the guidance comes after Treasury Secretary Steven Mnuchin announced Tuesday that individuals would be able to defer up to $1 million and corporations would be able to defer up to $10 million for 90 days without penalties and interest.
The guidance specifies that individuals and corporations can defer payments, including for self-employment taxes, that were due April 15 until July 15. It states that the $1 million limit applies both to single filers and to married couples filing joint returns.
Treasury and the IRS also say in the guidance that the extension of the payment due date applies to taxpayers’ 2019 taxes due on April 15 as well as to federal estimated income tax payments due on that date that pertain to the 2020 tax year.
Additionally, the guidance states that the deadline to file tax returns has not been extended and remains April 15. As is the case every year, people can request the IRS to grant them six-month extensions to file their returns.
Mnuchin said in a statement Wednesday that the guidance will help to ensure that “hardworking Americans and businesses have additional liquidity for the next several months.”
He also encouraged people to file their returns by April 15 “because many will receive a refund.”
Tax professionals had been encouraging Treasury to extend the filing deadline in addition to the payment deadline to further ease burdens for taxpayers and to ensure that people can receive the tax-preparation assistance they need.
The American Institute of CPAs (AICPA) expressed disappointment that Treasury’s guidance didn’t extend the filing deadline, and encouraged Treasury to still do so.
“The AICPA understands the need for economic stimulus and, if possible, those who can file and get refunds should do so now. However, it is impossible for every taxpayer and their tax adviser to prepare returns in this environment,” said AICPA President and CEO Barry Melancon.
“Nearly 60% 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,” he added. “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 15th filing deadline and providing more clarity on the details of recent relief actions.”
– Updated at 5:25 p.m.