Broker Check

Tax Updates and the Cornoavirus

March 19, 2020
Share |

March 18, 2020


Tax Update and the Coronavirus

An Important Message to our Clients, Friends, and Fellow Taxpayers

With fears of COVID-19 changing our lives at the present moment, it is easy to let something like taxes fall by the wayside. While Congress is considering extending the deadline, it actually pays to get moving on your return sooner rather than later, especially if you are due a refund. With all the financial uncertainty during the crisis, it is better to have that money in your pocket now more than ever.

On Friday, March 13, 2020, President Trump declared a national emergency over the coronavirus, setting the stage for the Treasury and IRS to offer administrative tax relief. Some of the solutions being discussed include extending deadlines for tax return filing and tax payments, waiving penalties for late payments and interest, and expediting amended tax return processing.

In addition, the House and Senate are voting on a bill to provide tax cuts for employers offering emergency sick leave. It does not include the payroll tax cut sought by the President, but it does require insurers to cover coronavirus testing, and it provides enhanced unemployment benefits and increased food aid for children, among other things. The Senate is expected to pass the bill this week, and a Presidential signature after that is all but certain.

The President has announced that he will instruct the Treasury to allow individuals and businesses that are negatively affected by the coronavirus to defer their tax payments beyond the April 15 deadline. Individuals and businesses will have an extra 90 days to pay the IRS if they owe additional income tax for 2019. Please note that I did not say additional time to FILE! This is tax law we are dealing with. Laws are subject to both interpretation, as well as clarification. Remember, 2020 is a leap year; therefore, 90 days would actually be July 14th, not July 15th! There’s a lot of “noise” out on social media and a lot of misinformation being delivered by the media. As a tax professional – Enrolled Agent, Certified Tax Planner, and Certified Tax Coach – it is my goal to put before you TAX FACTS and provide you with reliable information.

Normally, taxpayers owe any balance of tax due by April 15. As part of the government's response to the coronavirus, individual and small business filers will be able to defer payments of up to $1 million and corporations can defer up to $10 million -- without incurring interest or penalties. Please be aware, this is not an extension of time to file tax returns or filing a request for an extension, but does provide some relief for those who owe tax. It has always been my practice to schedule balance due debit amounts (as a payment convenience for the taxpayer) when filing returns for our clients to be paid by April 10th in order to avoid the mass rush and overload on the IRS computer systems (which have happened in the past) and we will continue to offer that option.

If you feel that it is necessary for you to delay the payment of your taxes beyond that date and choose to take advantage of the 90-day payment deferral, we will provide you with a payment voucher as part of your tax return. It will be your responsibility to decide “when” you send in the payment. For taxpayers who may have already filed their returns and scheduled a delayed payment to the IRS, you do have the option of contacting the IRS directly at 888-353-4537 to cancel your electronic payment. You will then need to make arrangements to either mail your payment in, or reschedule your payment directly with the IRS using their Electronic Federal Tax Payment System (EFTPS). The IRS has indicated that all penalties and interest “should” be waived if the payment is timely received. Since this is a new process, only time will tell as to whether or not you will receive IRS correspondence regarding the delayed payment.

Also, please keep in mind that the current tax payment deferral announcement made by U.S. Treasury Secretary, Steven Mnuchin, made NO mention of any delay in the payment of quarterly estimated tax payments, payroll taxes, estate taxes, or gift taxes. So for now, we are recommending that all of those tax payments be made according to their regularly scheduled due dates.

It is important to remember that all bills must pass both the House of Representatives and the Senate and be signed into law by the President. There are many things being discussed in the media (such as the $1,000 stimulus payment) that have not yet become laws. Until they do, the current laws stand, including the due dates for tax returns and extension requests.

As stated by the U.S. Court of Appeals’, Judge Learned Hand, on July 14, 2009, "Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one's taxes." Here at Lynco Financial & Tax Services, Inc., we serve and guide our clients under the spirit and direction of that ideology.

Our goal is to help people KEEP more of what they make and SAVE more of what they keep. We help people make smart choices about their money and finances so they can pursue their goals and what is important to them. We do this by helping people get their entire financial house in order, and we help them keep it that way for life.

We will continue to keep you informed about changes that directly impact and benefit you. In the meantime, be well and stay healthy. If you have any questions regarding taxes, finances, or any other planning issues, please don’t hesitate to contact me!

Sincerely,

Lynn A. Schmidt, EA, CTP, CTC, CFS, CSA, ARA
Enrolled Agent, Certified Tax Planner, Certified Tax Coach
Certified Fund Specialist, Certified Senior Advisor
Accredited Retirement Advisor