The IRS is taking action relating to 2019 tax returns…but probably not like you thought it would.
It’s been widely expected that the IRS would postpone the upcoming April 15 tax deadline, but that has not officially happened yet. However, speaking at a press conference on March 17, Treasury Secretary Steven Mnuchin said that individual taxpayers would be able to defer up to $1 million in tax payments to the IRS for 90 days because of the COVID-19 outbreak.
Based on Mnuchin’s statements, this would provide a three-month window to postpone payment without any penalties or interest. The $1 million threshold was chosen, noted Mnuchin, to accommodate pass-through entities, like S corporations and partnerships, where taxes are reported on individual returns.
A comparable delay of up to $10 million would be available to corporations.
During the press conference, Mnuchin asserted that the delay would amount to a deferral of $300 billion. He characterized that as "an enormous amount of liquidity in the system."
In the meantime, the IRS continues to urge taxpayers to file their returns by the April 15 deadline if they can do so, especially if they will be receiving a refund. This will enable them to get their hands on the money faster.
Numerous lawmakers and stakeholders in the tax community, including the American Institute of CPAs (AICPA), have been critical of the government’s failure to push back the April 15 filing deadline as the coronavirus spreads. We may see more action on this front shortly.
Editorial Note: It was noted that a statement by Mnuchin about a tax payment extension at a news conference does not technically count as official guidance.
UPDATE: On 3/18, AICPA President Barry Melancon issued this letter, stating the Institute's, and profession's concern that the Treasury did not go far enough in simply extending payments:
Ken Berry, Esq., is a nationally known writer and editor specializing in tax, financial, and legal matters. During his long career, he has served as managing editor of a publisher of content-based marketing tools and vice president of an online continuing education company. As a freelance writer, Ken has authored thousands of articles for a...