WASHINGTON, DC – MARCH 17: (L-R) U.S. President Donald Trump looks on as Treasury Secretary Steven … [+]
(Author’s Note: After this article was published, on March 20, 2020, Treasury Secretary Mnuchin announced that the tax filing deadline has been extended to July 15, 2020. You can find new details here.)
The devil is in the details. As rumors fly about tax relief in response to COVID-19, tax professionals – including me – have been encouraging taxpayers to proceed with caution. That’s because while rumors have persisted about filing deadlines – with many declaring that the Internal Revenue Service (IRS) has agreed to extend the filing season by 30, 60, or as many as 120 days – as of today, there has not been an official extension of the deadline.
COVID-19 is the official name for the infectious disease caused by the most recently discovered coronavirus. According to the World Health Organization, as of March 17, 2020, there are 173,344 confirmed cases of COVID-19 in 144 territories and countries. According to Johns Hopkins, the United States has 4,661 confirmed cases.
As a result of the virus, state, local, and federal government officials have instituted varying degrees of voluntary and mandatory quarantines. The impact has been felt immediately by some businesses, including those who depend on in-person customer interaction.
To mitigate the damage to the economy, Treasury Secretary Steven Mnuchin announced some changes to the tax filing season. During a White House briefing, Mnuchin explained that the IRS would allow taxpayers to defer some payments.
“If you owe a payment to the IRS, you can defer up to $1 million as an individual — and the reason why we are doing $1 million is because that covers lots of pass-throughs and small businesses — and $10 million to corporations, interest-free and penalty-free for 90 days. All you have to do is file your taxes, you’ll automatically not get charged interest and penalties,” Mnuchin said.
This has been reported by some as an extension of the tax season by 90 days. However, Secretary Mnuchin made clear that was not the case. He said, specifically, “We encourage those Americans who can file their taxes to continue to file their taxes” by the normal tax filing deadline. The IRS could extend that filing deadline, but it is not yet clear whether that will happen. To be clear, as of today, the deadline for filing your individual federal income tax returns remains April 15, 2020. If you need more time to file your federal income tax returns, consider filing for an extension.
Additionally, the IRS has not announced official guidance on the penalty and interest provisions. Hopefully, we’ll have some clarity on those soon.
As part of the response to the virus, the House passed H.R. 6201, Families First Coronavirus Response Act. While the President has voiced support for the bill, the Senate has not yet voted.
Additionally, President Trump has called for payroll tax relief. On Tuesday, Secretary Mnuchin suggested that might not happen. Instead, the idea of a stimulus check – similar to those we’ve seen before – is on the table for consideration. So far, there are no firm plans.
As tax updates become available, we’ll keep you updated. Keep checking back for details.
Some states and local tax authorities are also offering tax relief. For a continually updated list, click here.