IN THIS ARTICLE
IRS Extends Filing And Payment Deadlines Until July 15 — What Should Practitioners Do Now?
As a practitioner, what should you tell clients to do?
How can companies get quick cash back from the IRS?
Has COVID-19 had an effect on fiscal year taxpayers?
Has there been any impact regarding Estate, Gift, and Trust issues as a result of COVID-19?
Have HSA, IRA and Roth Account contribution timelines been extended?
IRS extends filing and payment deadlines until July 15 – what should practitioners do now?
As part of the U.S. government’s coronavirus response, the IRS initially announced in Notice 2020-17 an extension of the April 15 tax payment deadline until July 15 for individuals and businesses owing certain amounts.
After further consideration, and to avoid confusion between filing dates and payment dates, the IRS announced in Notice 2020-18 (which supersedes Notice 2020-17) the extension of the April 15 tax filing and tax payment deadline by 90 days until July 15 for all taxpayers, without limitation on how much is owed. 2020 estimated payments due April 15 are also deferred until July 15. The filing and payment extensions are automatic, i.e., no extensions need to be filed to qualify for the extensions.
Other taxes, such as payroll and excise taxes, are not covered by this relief but may be the subject of future IRS guidance.
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As a practitioner, what should you tell clients to do?
Part of the answer will be supplied by your clients. Some clients will tell you that they want to file and pay on April 15, file but not pay until July 15, or just wait until July 15 to file and pay. You will need to adjust your tax season work plans and staffing levels to respond to the re-distribution that is likely to occur. You will also need to adjust your firm’s revenue and cash flow expectations.
Part of the answer will also be determined by helping your clients assess their individual and/or business situation and cash flow needs in the coming months.
Advise clients who will receive refunds or who may receive a federal refund but owe state tax (or vice versa) to file now if the combined filings will completely satisfy their entire tax liability for 2019. This simply leverages monies already paid into the tax authorities and does not make any demands on your client’s current cash flow or savings.
For clients who will owe on July 15, the analysis becomes more complex. For individuals, you should work to assess their current financial situation and ability to pay. This should include an analysis of the client’s 2020 projected tax liability to date so that you will have a more complete picture and sense of how best to deploy what may be limited funds and other immediate financial needs. (A sample client letter will help you explain options available to your client).
For businesses, a similar analysis should be conducted. For businesses with a payroll, if the client is in financial distress, it is probably better to keep current with all payroll tax liabilities to prevent the liabilities from pyramiding and because paying other creditors before the IRS exposes the client to personal liability for 100% of the tax under IRC §6672 as the “responsible person.”