In a day and age where we are all inundated with information via social media and smart devices it is sometimes hard to decipher fact from fiction and news from rumors. Compounded by the world’s reactions and responses to the coronavirus pandemic (COVID-19) and upcoming tax deadlines, there is a lot of misinformation floating around.
Even in a time when everything is operating normally, there are common misunderstandings about how extensions related to your tax filings actually work. The IRS and state taxing authorities offer extensions for filing your tax returns; that is, they give you the ability to send in your paperwork after the original deadline if you send in the required request letting them know you are doing so. This does not, however, extend the date that you have to pay your taxes. Any balance that is due to be paid still needs to be paid by the original due date, even if you get an extension of time to send in the tax return itself. Not sending your payment by the original due date will result in interest being charged, and in most cases, depending on the balance due, penalties as well.
Government Response to COVID-19
Each taxing authority has its own regulations and no one blanket response covers them all. The response to COVID-19 is no different.On March 17, 2020, the federal government made an announcement of relief being offered to taxpayers during this viral outbreak. Opposite of what was discussed above, the federal government is allowing taxpayers an extension of time to pay their taxes both penalty and interest free. The IRS, however, is not giving an extension of time to file your taxes, so tax returns or requests for extension are still due by April 15, 2020, just as before.This extension of time to pay is being offered to individual taxpayers that owe one million dollars or less, and to corporate taxpayers that owe ten million dollars or less.The extension of time is for 90 days so payments will be due July 15th; however, at this time it appears this is only for payments related to your 2019 taxes with any estimated tax payments for 2020 being due as usual on April 15th. The specific details of this relief have not been released yet so it is unclear if there are any other exceptions or specific types of tax that are included or excluded from the relief, so it is best at this point to continue to plan on everything being due by April 15th so you are not caught by surprise in the end.Again, this does not apply to state or local taxes that may be due, each jurisdiction must pass its own legislation to allow for relief in response to COVID-19, and each state is handling it differently. Some states are not making any changes at all.
Never assume that what you have heard is fact and always check with us if you have a question related to your tax filings. We are all being forced to make changes in response to this viral outbreak and HHM is no exception; however, we are still here to help you through this filing season and keep you compliant. It is more important than ever that you communicate with us, respond to our requests as usual, and not delay your response time due to misinformation about tax deadlines.As things continue to change and new tax relief measures are instituted, we will do our best to keep you up to date on which measures may impact you. Always, if any questions should arise, you can reach out to your trusted tax advisor to make sure that you are following the rules that apply to you and staying compliant.