Tax Payment Deferred Due to COVID-19 Pandemic
The COVID-19 pandemic that has been sweeping across the United States since January has had a larger impact on the country as a whole than many anticipated. Businesses and schools have been closed, events canceled, and people encouraged to stay away from any gatherings of more than 10 people. This has left many people with little to no income as their companies close their doors, but with bills to pay. As the normal tax deadline approaches, many have wondered how they’ll afford to pay their taxes. Well, there’s good news: You have more time to pay than you think.
Nationwide Deferral for 90 Days
On March 17, the IRS announced that it would be deferring all tax payments for an additional 90 days beyond the typical April 15 deadline. This means you’ll have until mid-July to pay any taxes that you owe to the IRS. According to current projections, the COVID-19 pandemic is expected to be mostly behind us by the end of July, and the hope is that this will give taxpayers enough time to deal with immediate financial needs and get back to life as normal before worrying about paying their taxes.
This deferral is given automatically to all taxpayers, so you don’t have to worry about applying for it or reaching out to the IRS to receive it.
Filing Deadline Just Extended
As of the morning of March 20, the deferral for tax payments was broadened and now includes an automatic extension for all tax returns until July 15. Again, this is automatically given so that you have more time to focus on more pressing current issues for your family. However, we still recommend that you file as soon as possible; if you're getting a refund, the additional funds may help you through this time, and if you owe, you'll know exactly how much you'll have to pay by July 15.
Maximum Amounts for Deferrals
Like most tax-related items, there is a cap on just how much tax debt you can defer for those 90 days. Currently, the limits are as follows:
- Individuals may defer up to $1 million
- Businesses may defer up to $10 million
Obviously, these limits are quite high, so the majority of taxpayers will not be impacted by this. However, if you do owe more than the amounts listed above, you are expected to pay any tax debt in excess of that amount by April 15; the rest may be deferred up to 90 days.
Helping to Flatten the Curve
As with the cancellation of large events, this payment deferral is being offered in hopes of helping to flatten the curve and slow the spread of COVID-19. How does a simple deferral of tax payments do this? Here are a few ways it can help:
- By deferring payments, the IRS is hoping to offer some financial relief to Americans, enabling them to stay home from work more easily, minimizing exposure to others.
- Payment deferral eases the pressure of the pending deadline on tax preparation firms and CPAs. This allows us to spend fewer hours in the office and more time at home, per the government’s recommendations
- It also eases pressure on the IRS, so that they can have fewer people in their office and minimize person-to-person contact at this incredibly busy time of the year for them.
While these may seem like small changes, their impact can be enormous on helping to slow COVID-19’s spread across the country.
How Does This Impact Our Offices?
Here at Camputaro & Associates, we are committed to continuing to assist our clients with their tax preparation and other accounting needs while also protecting the health and wellbeing of those in our community. Rest assured that we are still working for you every day—whether that be from our offices or in our homes.
If you have an upcoming tax appointment with one of our CPAs, please reach out to us to discuss options for meeting remotely. We are happy to speak to you over the phone or via video call to minimize contact and exposure in our community while still meeting your needs, and can receive your tax documents digitally.
If you have any questions about the IRS’s payment deferral for tax debts and filing extension, or how COVID-19 is impacting the day-to-day operations of our business, please feel free to reach out to us. Our accountants are still available to speak with you and offer you any assistance you may need. We appreciate your patience at this difficult time and encourage everyone to do their part to keep themselves and those around them healthy.
Camputaro and Associates
Certified Public Accounting Firm
136 N. Orchard Street, Suite 8
Ormond Beach, FL 32174