Coronavirus to impact tax-filing deadlines and tax payments

You have likely heard news items indicating that both the Trump administration and Congress are considering extending the April 15 filing deadline, as well as looking for ways to provide stimulus to the economy. In his address last evening, the president stated, “Using emergency authority, I will be instructing the Treasury Department to defer tax payments, without interest or penalties, for certain individuals and businesses negatively impacted” (emphasis added).

As of yet, there are no details available regarding this statement or how the deferral would be implemented. Critical factors were not released, including how “certain individuals” will be identified and how it will be determined who is “negatively impacted.”

Treasury is also considering extending the filing deadline for all Americans. Speculation is the extension would apply to both the filing of Form 1040 and any payments due on April 15. The IRS often extends filing deadlines in affected areas after natural disasters, and the tax code specifically authorizes the Treasury to grant delays following presidentially declared disasters.

At this time, no specific proposals have been released. Some important items to keep in mind:

• There is no indication as to the length of any extension period.
• It is unclear if the extended payment period will apply to first quarter 2020 estimated payments.
• While Treasury has the authority to waive late filing and payment penalties, it is uncertain whether they can unilaterally waive interest charges or if congressional action would be required.
• It is critical to note that these extended filing and payment deadlines are being contemplated by the federal government and will not apply to state individual tax returns. States may also consider extending their own filing deadlines, so careful monitoring is required.
• There has been no indication that the extended filing deadline would apply to either corporate or trust returns that are also due on April 15.

We will be providing additional alerts once Treasury releases details of any tax filing and payment extensions.

Tax relief for workers and businesses

The president also called for payroll tax relief through a tax holiday. Such a proposal may be similar to the payroll tax holiday that reduced the Social Security contribution rate for employees and the self-employed by 2 percentage points from January 2011 through December 2012. This measure would require congressional action.