The IRS could extend the tax payment deadline or waive penalties and interest for late payments



President Donald Trump and his economic team are working toward a response to the impact of the coronavirus on the economy. As a result, the IRS could extend the tax payment deadline or waive penalties and interest for late payments.


Treasury and White House officials have been discussing the idea of extending the tax deadline over the past week as the administration considers measures to relieve financial pressure on individuals and businesses struggling with fallout from a virus that has closed schools, kept workers at home and disrupted supply chains.


The Treasury Department will likely push back the April 15 deadline to file taxes and is considering delaying tax payments beyond the April 15 deadline as taxpayers and the Internal Revenue Service brace for economic disruption from the spread of the coronavirus.


Normally, individuals must pay their prior year’s taxes by April 15 or face penalties and interest charges. People can already get extensions through mid-October to file their returns as long as they have paid on time by mid-April. This decision would go further than that.


Extending the tax filing deadline would effectively act as a bridge loan for individuals and businesses facing disruptions from the virus. Treasury officials are still considering how far the filing deadline may be pushed back and who would be eligible for the extension, according to the person familiar with the discussions.


The Wall Street Journal reports that the Trump administration is likely to delay the deadline for filing income tax returns as part of its fiscal stimulus plan to combat the impact of the coronavirus outbreak,


The plan, which was reported by The Wall Street Journal, came as Democrats on the House Ways and Means Committee wrote to Charles Rettig, the IRS commissioner, to ask for an update on the effect of the outbreak on tax filing season and for an evaluation of whether the agency needed to re-evaluate the traditional April 15 deadline.


“We are concerned about the ability of the IRS to provide taxpayer assistance and process returns, as well as the ability of taxpayers, free tax preparation sites, and tax professionals to meet the filing deadline,” the lawmakers wrote. They noted that “the IRS has authority to extend the time for filing any return for six months or less and the authority to waive certain penalties upon a showing of reasonable cause.”


Neither the decision to extend the deadline nor the mechanics of how such an extension might work are yet final.


Lawmakers also asked that the I.R.S. consider “the need for relief” from certain filing and payment fees and penalties for people affected by the coronavirus.


Asked after a congressional hearing last week about deferring or delaying tax payments, Treasury Secretary Steven Mnuchin acknowledged that the idea had been discussed but said it was “not something we’re considering at the moment.”


During a meeting with Senate Republicans on Tuesday, Trump pitched slashing payroll taxes to 0% for the rest of the year.


On Monday, as stock markets plunged, President Trump said the administration would consider economic stimulus options, including a payroll tax cut and other relief. During a White House briefing on the virus on Tuesday, Larry Kudlow, the director of the National Economic Council, said the administration could use executive authority to help individuals and businesses, noting that “we have leverage on tax deferral.”


The Treasury Secretary is holding talks with Speaker Nancy Pelosi about a package of options for stimulating the economy. After a meeting with her on Tuesday afternoon, Mr. Mnuchin said that he was hopeful that a bipartisan agreement could be reached on legislation, but that he was also working on options that the Treasury Department could take unilaterally.


“There are things we can do on our own, and we’re exploring those, too,” Mr. Mnuchin said.

Delaying tax day would also ease logistical problems that the IRS could face if more government workers were forced to work remotely. The tax collection agency has service centers across the country that require staff to have face-to-face contact with the general public.


The Taxpayer Advocate Service is working with IRS leaders to decide how the agency should respond to employee concerns about the coronavirus, including whether it needs to adjust travel or teleworking policies.


That’s not to mention the accounting firms and their employees, who have to have meetings with clients and partner reviews of tax returns, all the while working seven days a week, 10 to 12 hours a day — not good for anyone’s immune system.


~ As reported by The Wall Street Journal, CNBC and The New York Times




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