Don't Mess With Taxes

States also are coping with COVID-19 and tax return timing, with a handful already delaying some returns.

UPDATE, March 21, 2020: Tax Day 2020 has changed again. Now taxpayers have until July 15 to file their 2019 returns and pay any due tax. This latest change was announced March 20 and the IRS issued some guidance on the changes on March 21.

This window's timely admonition usually is good advice as April 15 nears. This year, however, Tax Day may be pushed back due to the spreading coronavirus. (Painted window in Harlingen, Texas, 1939, by Lee Russell; New York Public Library image via Unsplash)

When Donald J. Trump on Friday, March 13, declared a national emergency in connection with the coronavirus outbreak, he also sparked a lively discussion among the tax, political and legal communities as to just what it means as far as return filing.

The key question is, does this new emergency status give the Internal Revenue Service to make unilateral decisions?

Basically, since Tax Day isn't addressed in the House-approved coronavirus relief act, everyone wants to know whether the Treasury Department and/or the IRS can move the impending April 15 deadline to some later date without Congressional action.

Internal Revenue Code sections and previously passed special disaster and emergency acts are being cited among social media residents of #TaxTwitter. The differences between a national emergency and a federally declared disaster are being debated. The finer, but crucial, points of extended deadlines for filing only vs. more time to file and pay due taxes also are being discussed. And don't forget about that added interest issue.

Sentiment for delay, but process still hazy: Even Treasury Secretary Steven Mnuchin seemed unsure about the IRS' authority if not the delay itself.

"For small and medium-sized businesses, for hardworking individuals, we are going to recommend to the president that we allow the [filing] delay and that [taxpayers] don't have to pay any interest or penalty on that. This will have the impact of putting over $200 billion back into the economy," he said.

But as to how to do that, he was less confident. In speaking with reporters after a House hearing on March 11, Mnuchin said Treasury was "examining its authority" to extend the April 15 deadline.

The House and Senate both seem inclined to OK a postponement. Democrats on the Ways and Means Committee sent IRS Commissioner Charles Rettig a letter on March 10 inquiring about a possible postponement. The next day, a group of Senators followed with their own correspondence "urging [Rettig] to provide significant flexibility on the April 15 tax filing season deadline for individual taxpayers."

And we all know that even when folks on Capitol Hill agree, the legislative wheels grind slowly. Heck, we're waiting right now for the Senate to come back and vote on the House- and Trump-approved COVID-19 relief bill.

So we wait. For medical updates, the restocking of our local grocers' shelves and details on if and how tax season 2020 might be affected more than it already is.

Keeping up with COVID-19: When we do finally get word on any of those things, particularly the tax announcements, I'll let you know here on the ol' blog.

But you also might want to bookmark these Shout Out Sunday links.

First, there's the IRS' special webpage on Coronavirus Tax Relief.

The IRS established this special section to highlight "steps to help taxpayers, businesses and others affected by the coronavirus. This page will be updated as new information is available"

The page already cites the IRS guidance issued last week that high-deductible health plans (HDHPs) can pay for 2019 Novel Coronavirus (COVID-19)-related testing and treatment.

This ruling provides employers and insurers the flexibility to cover these services without cost-sharing. Essentially, the IRS says HDHPs with health saving accounts (HSAs) will not lose their plan status if they provide medical care services and items related to the testing or treatment of the coronavirus prior to a plan member meeting the deductible. 

In addition to tax-related COVID-19 alerts, the special IRS page also cites the Treasury Department's Coronavirus: Resources, Updates, and What You Should Know online page, as well as additional pandemic information from the Centers for Disease Control and Prevention (CDC) and the U.S. government's coronavirus page (also available in Spanish).

State coronavirus reactions: Then here are state taxes. Filers in 43 states and the District of Columbia also face tax return filing, most due the same day as Uncle Sam usual requires federal taxpayers to file.

Some state residents already have some extra time for other horrible circumstances — natural disasters. That's the case in parts of Tennessee, where deadly tornadoes hit earlier this month. Affected Volunteer State taxpayers have until July 15 to file.

In neighboring Alabama, residents affected by floods in February also get more time — until April 30 — to file their state taxes. The Alabama Department of Revenue also will grant affected Yellowhammer State taxpayers penalty relief during the extension period.

As for coronavirus changes to filings, California is leading here. The Golden State, with 377 reported cases and five deaths, has pushed its tax filing and payment deadline to June 15. Maryland also has delayed filing for Old Line State businesses, with those returns now not due until June 1.

You can check with your states department of taxation or revenue. Links to each are in the ol' blog's state tax directory.

Also, the American Institute of Certified Public Accountants (AICPA) has put together a State Tax Filing Guidance for Coronavirus Pandemic online document that it is updating.

UPDATE, mid-afternoon Sunday, March 15 from an AICPA member:

If you haven't finished your taxes and are hoping for more time without have to mess with filing an extension, stay tuned. That might happen.

Mostly though, as I've said before and will keep repeating until this has passed, take care of yourself and your loved ones. Taxes will always wait, with or without extra time from Uncle Sam. Your and your families' health is much more important.

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