Treasury Secretary Announces Taxpayers Can Defer Tax Payments for 90 Days, But Must Still File

By:
Chris Gaetano
Published Date:
Mar 17, 2020
Responding to the economic damage that the coronavirus pandemic has wreaked, Treasury Secretary Steven Mnuchin, in a White House briefing, said that the IRS will allow individual taxpayers to defer payments of up to $1 million (or $10 million in the case of corporations) for 90 days, all interest and penalty-free. So, according to CNBC, taxpayers will get a three-month reprieve. However, taxpayers will still need to file in order to claim the extension, just as they must do when applying for an extension in normal times.

"All you have to do is file your taxes," said the secretary.

Mnuchin added that Americans should file their taxes on time, if possible, since they might get refunds. 'We encourage those Americans who can file their taxes to continue to file their taxes on April 15,” he said, noting that since most filing is done electronically nowadays, this should be easy to do.

Philip London, a tax partner at Wiss and Company and the chair of the Society's Tax Division Oversight Committee, reacted positively to the news but said there is still much to be done.

"It’s a good start, but if there is no automatic extension for filing, we still need to be preparing extensions and gathering information to properly file the extension. Also, we don’t know the status of estimated tax payments for 2020, the first installment of which is due April 15th," he said.

Ronald Hegt, a Citrin Cooperman tax partner, was similarly both glad at the news and concerned about the details. 

"It’s a good start ,but if there is no automatic extension for filing, we still need to be preparing extensions and gathering information to properly file the extension. Also, we don’t know the status of estimated tax payments for 2020, the first installment of which is due April 15th," said Hegt. 

James Jacaruso, a tax director with EisnerAmper, questioned what this would mean for high net worth taxpayers and their preparers, given that tax projections will be required.

"Having to prepare income tax projections later than usual becomes a burdensome, maybe impossible, task for the tax community," he said, adding that clear guidance is needed regarding whether an actual tax return needs to be filed to avoid penalties and interest. 

He also pointed out a number of ambiguities, such as how this extension applies to salaried employees with significant portfolio income, or how self-employed workers and businesses factor into things.

Katheryn Vunic, a sole practitioner in New York, similarly thought that while the measure would certainly bring relief to many Americans, the lack of a filing extension introduces problems, as it still does not address the issue of having enough time to prepare and file accurate tax returns or make accurate calculations for taxes owed.

"The majority of tax professional offices are currently understaffed due to the escalating coronavirus situation," she said. " This puts a substantial amount of additional pressure on tax professionals to meet the filing deadline, and may be unrealistic for some CPA firms to service all their clients."

Marc Strohl, a principal with Protax Consulting, was blunt in his assessment, calling the announcement "very disappointing."

"Too little too late. Where is our IRS formal guidance?" he said, decrying the lack of support from the IRS overall. "This is a lot of cheap talk and nothing substantive. Where is the April 15 due date extension? Where was our March 15 due date extension? Where are the state and city responses in all this? Too much silence. There are CPA firms really hurting."

The NYSSCPA has been in contact with senators Schumer and Gillibrand's offices, as well as with the state's House representatives. It has also been in contact with the New York State Department of Taxation and Finance to address state deadlines.

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