Taxable Talk

UPDATE: Please see this post that has the final versions.

We prepare tax returns for individuals throughout the United States, so we have to keep track of the deadlines–and that’s a task right now. So we created a spreadsheet with the information so we can see this at a glance (there’s also a pdf version).

These may be of use to others, so we’re sharing them. We’re going to try to update this every Monday. Note that we believe the deadlines noted are accurate, but this is (obviously) a fast-changing situation. Deadlines that are before July 15th are in bold.

As of this morning, Arkansas, Hawaii, Michigan, New Hampshire, New Jersey, Rhode Island, Tennessee, and Vermont have not extended their state deadlines.

UPDATE March 30th: Arkansas has extended its deadline to July 15th. The CARES act extended the first three quarters of federal estimated payments to October 15th. The CARES act extended just the first quarter estimated payment to July. I have updated the spreadsheet and pdf for these changes.

Yesterday, the IRS released guidance on the July 15th due date. The IRS guidance confirmed my previous post that not all tax filings have been extended. Among the clarifications:

• Estate and Gift Tax returns (Form 706 and 709) were not extended. This means that if you are filing a Gift Tax return for 2019 you need to either extend your personal return by filing Form 4868 or file a Gift Tax Extension, Form 8992. This is another trap for the unwary: taxpayers who file their individual returns timely in, say, June and concurrently file a Form 709 Gift Tax Return will be filing the Gift Tax return late.
• The deadline to file tax extensions (Form 4868 for individuals and Form 7004 for C-Corporations and trusts/estates) is July 15th.
• Second quarter estimated payments are due (for the moment) on June 15th (1st quarter estimated payments are due on July 15th). However, the stimulus bill that will likely pass Congress appears to change the deadline for the 1st through 3rd quarter federal estimated payments to October 15th.
• The deadline to contribute to an IRA or Roth IRA is now July 15th.
• You can contribute to an HSA for 2019 until July 15th.
• If you are filing a claim for refund for 2016, that claim still must be filed by April 15, 2020 to be timely.
• The IRS changes do not change state tax deadlines. However, many (likely most) states will move to the July 15th deadline.

Kudos to the IRS for getting this out quickly.

One other comment on payments: Tax software companies are working with the IRS to modify tax software to allow scheduling of tax payments after April 15th. This will likely take a couple of weeks to get done as this must be tested by both the software companies and the IRS.

UPDATE: The IRS can now handle payment scheduling through July 15th, and the software company we used announced we can schedule federal tax payments for dates up to July 15th. I’m not sure what will happen with estimated tax payments or the various states at this point, but that’s definitely a step forward.

Friday night, the IRS made it official regarding income tax returns due on April 15th; they are now due on July 15th. However, not all returns have been extended.

First, while I expect most states to conform to this deadline it may take a week or two for this to occur. The AICPA is maintaining a list. Local property taxes are also still due as normal (in most areas).

But when we look at federal returns, not everything was extended. Let’s look at this form by form:

• Forms 1040, 1040-NR, 1040-SR, 1041, and 1120: These are now due on July 15th.
• Forms 1040-ES: This is where it gets confusing. First quarter payments due on April 15th have been extended to July 15th. However, second quarter payments due on June 15th are still due on June 15th. There is legislation pending in Congress that would extend the deadline for paying the first three quarters of estimated tax payments to October 15th. Some states (e.g. California) have extended second quarter payments to July 15th.
• Forms 1065 and 1120-S: These were due on March 16th and were not extended.
• Forms 706 (Estate Tax) & 709 (Gift Tax): These are now due on July 15th per IRS Notice 2020-20.
• Form 720 (Excise Tax): These are still due on the original due dates.
• Form 941 and Other Payroll Tax Forms: These are still due on the normal dates.
• Form 990 (Non-Profits and Charities) Series: These are due on May 15th. As of today, they have not been extended.
• Form 3520A: This was due on March 16th and was not extended.
• Form 3520: This is still due on April 15th. However, an extension of time for Form 1040 extends the time for Form 3520. It’s unclear whether anyone not filing an extension has until July 15th to file Form 3520. The simple solution for anyone filing Form 3520 is to extend your return by filing Form 4868 or Form 7004.
• Forms 4868/7004 (Tax Extensions): These are now due (assuming the underlying return has been extended) on July 15th. It is unclear how long an extension will be for (will extended returns be due on October 15th or January 15, 2021?).
• Forms 8804/8805: The due dates of these have not changed from April 15th.
• Form BE-10 Series: These are still due on May 29th. This is the required every five-year survey of US ownership of foreign entities.
• Backup Withholding Payments: These are still due as normal.
• FBAR (FINCEN Form 114): This was not extended. However, while the FBAR is due on April 15th, there is an automatic extension until October 15th.

I’m sure I missed a tax or two (and I’ll expand this as needed), but there are traps for the unwary.

Secretary of the Treasury Mnuchin tweeted this morning (literally two minutes after I finished the previous post):

At @realDonaldTrump’s direction, we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.

— Steven Mnuchin (@stevenmnuchin1) March 20, 2020

It will likely take a few days for the official IRS guidance to appear on this, but this was really the only course of action that could be done. I would expect every state to quickly conform to this change.

UPDATE: Two minutes after I finish this post Secretary Mnuchin announced that the tax deadline has been extended until July 15th.

I don’t want the deadline extended just to have it extended; however, it’s a necessity given what almost all tax professionals and their clients are going through today. Almost no tax professionals are seeing clients face-to-face. Many professionals have had to close their offices, or are working from home with reduced (or no staff). Given that over half of all tax returns are prepared by professionals, we’re between a rock and a hard place.

I’ve lost 25% of my staff. Now, we’re not a big firm but I suspect that between staff reduction and slower speeds of working from home, the 25% reduction in what we can do is typical of most tax firms (and it might even be better than most). I know we’re not getting to everything by April 15th.

Additionally, you are supposed to estimate your income when filing an extension. (Technically, if you don’t do that your extension can be ruled invalid by the courts and/or IRS.) That’s simply not going to happen this year. Yet the only thing firms will be able to do is simply file $0 extensions–there won’t be time to do anything else.

Consider firms in California. Yesterday, Governor Newsom ordered all businesses (except ‘essential’ businesses–and tax firms aren’t) closed, with sheltering at home. There will be firms where extensions don’t get filed!

My understanding is there is legislation pending in Congress that would extend the deadline to July 15th. Under the circumstances we’re in, Secretary Mnuchin should simply announce that the filing deadline and all payment deadlines (except wage withholding) are extended to July 15th. Right now, second quarter estimated payments are still due on June 15th!

Americans have a lot more to deal with than filing tax returns. Secretary Mnuchin, it’s time to do the right thing.

The IRS issued Notice 2020-17 extending tax payments until July 15th for most individual and corporate taxpayers. The Department of the Treasury also issued a press release noting the deferment of payments.

Again, the tax filing deadline has not been extended from April 15th. It may be in the future–while I can still work, many areas of the country (such as the San Francisco Bay Area and the Puget Sound) are under virtual lockdown. It would make a lot more sense to simply extend the deadline…but that has NOT happened.

Secretary of the Treasury Mnuchin appeared at a press conference with President Trump. They stated that there will be a massive stimulus package. Additionally, Secretary Mnuchin stated that the tax deadline would not be extended because much filing can be done online:

We encourage Americans who can file taxes to continue to file taxes on April 15 because for many Americans, you will get tax refunds and we don’t want you to lose out on those tax refunds.

However, you can defer payment for 90 days in most circumstances:

If you owe a payment to the IRS, you can defer up to $1 million as an individual, and $10 million to corporations, interest-free and penalty-free for 90 days. File your taxes, you’ll automatically not get charged interests or penalties.

The problem with not extending the deadline is something we’re seeing in the San Francisco Bay Area: What if all non-essential businesses are ordered to close? (Tax preparation firms are not essential businesses.) I think there’s a good chance this will impact other areas of the country besides the Bay Area. We’ve already made plans for this. While we can do some work from home, the speed we can do things at is definitely reduced. Additionally, some of our staff simply can’t work from home because of security issues. If we’re ordered to close we will be forced to file extensions for many returns. Unfortunately, I strongly suspect this will happen throughout the United States.

In any case, there is some relief though I think it would have been far better to have simply extended the deadline to July 15th.