The headlines have been popping up for several days: “Treasury delays April 15 deadline.”
It would be fair to guess that headline-scanners who don’t necessarily dive into the story would think, “Hey, I’ve got another 90 days to file my taxes.” Ursula Scroggs, co-owner and managing director of Troy-based accounting firm Derderian, Kann, Seyferth & Salucci (DKSS), says she even heard it announced that way on a network news broadcast.
But it isn’t true.
The Treasury Department has, indeed, announced their plan to extend the April 15 tax deadline to pay taxes owed by individuals and many businesses by 90 days, until mid-July. The filing deadline, according to Scroggs, has not changed.
You should file your tax returns, she said, because that particular due date has not changed.
“On news broadcasts they were saying, ‘you’ve got extra time to file your taxes,’ and it’s just wrong,” Scroggs said. “You should file your tax returns, because the due date has not changed. The only thing that has changed is that you’ve got until July to pay your 2019 taxes.”
U.S. Treasury Secretary Steven Mnuchin announced the deadline change earlier this week, an effort to inject up to $300 billion into the economy at a time when the coronavirus appears on the verge of causing a recession.
According to information provided by Southfield accounting firm Clayton & McKervey, IRS Notice 2020-17, issued by the Treasury Department Tuesday, clarifies several points from the department’s initial guidance:
- It grants a 90-day deferral, until July 15, 2020, for the payment of the applicable taxes.
- The amount that can be deferred is up to $10,000,000 for a C corporation (or consolidated group) or up to $1,000,000 for all other taxpayers. For an individual taxpayer, the deferral amount is the same for a single or married filing joint return.
- The notice only covers payments that are due on April 15, 2020. Therefore, any payments that would be due before or after April 15, 2020 are not eligible for the deferral.
- Deferral is for 2019 income taxes, including self-employment taxes, and 2020 estimated income tax payments, including self-employment taxes, that are due on April 15, 2020. The deferral is not applicable to any other type of taxes that may be due April 15, 2020. Other taxes, such as gift taxes, would still have to be paid by April 15, 2020.
- If the deferred payments are not made by July 15, 2020, interest and penalties will begin accruing on July 16, 2020. Any amount in excess of the allowed deferral amount that the taxpayer does not pay by April 15, 2020, will accrue interest and penalties from April 15, 2020.
- This is not an automatic extension of the requirement to file any tax return or any information return. Therefore, the filing of either a tax return or an extension will still be required by April 15, 2020.
According to Clayton & McKervey, state filing and payment obligations are not covered by the IRS guidance, so each state is addressing filing and payment obligations at the individual state level.
Michigan, they said, is among states (others include Colorado, Georgia, Maryland, Massachusetts, Ohio and Oregon) whose treasury departments have said they’ll mirror the IRS guidance, though there has been no official announcement.
The American Institute for Certified Public Accountants on Wednesday passed out information saying Michigan would, indeed, follow the IRS guidelines.
Scroggs pointed out the guidance contains no real mention of how they affect taxpayers who pay quarterly estimates, generally due in April, June, September and January.
CPA firms, she said, are still dealing with the dilemma of “how this affects quarterly estimates and what states are doing.”
“We’re kind of reeling, and our clients are kind of reeling,” Scroggs said.