Tax date change
To recap what changes are accompanying the US tax deadline change, then to understand any impacts this change could have on US citizens and on financial institutions.
- On March 21 the IRS announced that the federal income tax due date was extended from April 15, 2020, to July 15, 2020. The extension is automatic; that is, people don't have to file and request it.
- Federal income tax payments can also be deferred to July 15, without penalties or interest.
- The IRS is encouraging those who will receive a refund to file as soon as possible.
- It seems that these are the only changes, however they follow last week's emergency declaration pursuant to the Stafford Act.
- As a response to the COVID-19 situation, the IRS has also closed its centers with face-to-face services, but is continuing with online processing.
- There is, however, a difference between the IRS's guidance doc, which states that the extension is for those affected by COVID-19, and their press release, which says that the extension applies to all tax players, including individuals and corporations.
The White House
- The White House content on the tax date change does not contradict the IRS announcement. However, it does stress that the measure was implmented in order to protect small businesses.
- In the president's briefing, he stated the measure was aimed at assisting small businesses and families. He said he hoped that by July people would be getting back to their lives. He erroneously stated "We’re getting rid of interest and penalties" (in fact the interest and penalties are just being postponed), but then reiterated the IRS position, that people can file for refunds earlier if they want to.
- According to Forbes, the guidance doc means that caps are gone. "Further, remember those caps? The $1,000,000 in relief for individuals and $10,000,000 for corporations? Those are gone: there is no longer any limit on the amount of the payment that can be deferred."
- Potential impacts on the public include deciding whether it is in their best interest to file as normal (and prepare for the next tax year as normal), or to postpone, as well as the potential for an increasing number of scammers.
- There is some analysis about what this extension will mean for the national budget (a delay in tax income), but there is no information yet on the impact it will have on financial institutions.
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