Recent tax law changes, the pandemic and an underfunded IRS have coincided to make the current tax season exceptionally difficult for both taxpayers and tax practitioners who prepare tax returns. The IRS recently acknowledged this by announcing that it would extend the due date of Form 1040 and the payment of any 2020 individual taxes due from April 15 to May 17.
Unfortunately, this announcement fails to provide relief to those who need it most because it does not postpone the due dates for business returns and those who make estimated tax payments. The primary beneficiaries are those who already have the ability to file their tax returns by April 15.
The IRS’ failure to include estimated payments due on April 15 in its decision hurts taxpayers because generally 2020 tax return preparation work has to be completed in order to calculate the amount of 2021 estimated payments. According to the American Institute of Certified Public Accountants, more than 9.5 million individual returns filed for the 2018 tax year included estimated payments. Since 2018, growth in the gig economy has only increased the number of taxpayers who are required to make estimated tax payments. The IRS’ recent announcement unfortunately will result in greater confusion because it fails to address the circumstances faced by many taxpayers, tax practitioners and most of all small businesses.
The AICPA has asked members of Congress to call on the IRS to immediately give tax payment and filing relief to all taxpayers. The benefits of extending the payment and filing deadline to June 15 for all taxpayers are many. Doing so would ease the impact of the pandemic on taxpayers – especially small businesses – and the tax practitioners who advise them.
You can assist in this endeavor by contacting Rep. Mike Garcia, Sen. Dianne Feinstein and Sen. Alex Padilla to contact the IRS. Even if you are not personally affected by this issue, many local small businesses are adversely impacted at a time when they are under economic duress and need relief.
Jim de Bree