Accounting groups push for longer delay to tax deadline

Accounting

The National Association of CPA Practitioners is asking the IRS to postpone the tax deadline from May 17 until June 15 and to make it apply to quarterly estimated payments.

The open letter Monday from NCCPAP comes after the Internal Revenue Service and the Treasury Department agreed last week to push back the tax deadline from April 15 to May 17 to give taxpayers and tax preparers more time to file tax returns and make tax payments in the midst of the pandemic. Other accounting and tax professional groups like the American Institute of CPAs and the National Association of Tax Professionals have urged delays as well before the Treasury and the IRS agreed to delay the filing and payment deadline for individuals until May 17.

Last year, Congress agreed to delay the tax deadline until July 15 to help taxpayers get through the pandemic. Taxpayers, tax professionals and the IRS have also been dealing with the many tax changes since last year from the various COVID-19 relief packages like the CARES Act, the Families First Coronavirus Response Act, the Consolidated Appropriations Act and the recent American Rescue Plan Act. The IRS had to delay the start of tax season this year by about three weeks in order to send out the latest round of stimulus payments, and it has been busy writing guidance and regulations for the many new tax provisions since last year. After the IRS and the Treasury made the announcement, the AICPA pointed out that the relief didn’t go far enough. It doesn’t include estimated tax payments that are due April 15 and apply to millions of small business owners and individuals who pay estimated taxes, including trust income tax payments and return filings on Form 1041, and corporate income tax payments and return filings on various 1120 forms.

Tax forms

Daniel Acker/Bloomberg

In its letter Monday to Treasury Secretary Janet Yellen, Deputy Assistant Treasury Secretary Mark Mazur, and IRS Commissioner Chuck Rettig, the NCCPAP echoed that point. “The announcement made last week was for an extension of the due date for Form 1040 income tax returns for 2020. This announcement did not include estimated tax payments (Form 1040-ES) due April 15, 202, fiduciary tax returns (Form 1041) due April 15, 2021, [and] corporate income tax returns (Form 1120) due April 15, 2021.”

The group took issue with a response from Rettig during a congressional hearing last week when he was asked why the IRS isn’t changing the date of the first estimated tax payment for 2021. Rettig responded, “We do not want to see wealthy taxpayers gaming the system.”

NCCPAP pointed to several problems with Rettig’s statement. “First, estimated tax payments are not made by just the wealthy,” said the group. “Any individual who is a small business owner is most likely going to have to make estimated tax payments during the year to cover their potential tax liability. Not all business owners are wealthy. Most actually fall into the lower and middle-classes.”

NCCPAP also noted that for most taxpayers who need to make estimated tax payments during the year, the determination of what their estimated tax payments should initially be is done at the time that their tax returns are being prepared. Allowing the tax return to be filed in May, but still requiring the first estimate to be paid in April doesn’t help the taxpayer or tax preparer. “Instead, it leaves them in the same position that they were in prior to the announcement — having to get the work done in time for the April 15 due date,” said the group.

Changing the due date for one series of tax returns from a multiple group of returns that are due at the same time can lead to confusion for taxpayers. “They hear that they now have until May 17 to submit their personal income tax return and pay the balance due; however, for those that have to make estimated tax payments, if they need to have a fiduciary tax return prepared, they still need to act as if everything is due on April 15, regardless of the announcement by the IRS/Treasury Department,” said NCCPAP. “Many tax return preparers are being contacted by their clients about the new May 17 due date, only to be informed that there are still certain forms that have to be submitted by April 15. This does not remove the burden from tax practitioners, it only enhances it.”

The group said it appreciated the postponement of the filing date until May 17, but added that the announcement limits those who can actually take advantage of the relief. “By failing to include estimated tax payments, fiduciary tax returns, and corporate tax returns in the extension to May 17, the IRS fails to recognize the real-world stresses of the past year that have been imposed on taxpayers, small businesses and tax practitioners,” said NCCPAP.

The group reiterated its earlier request that the due date be extended until June 15, 2021. “At this time, in the strongest possible terms, we request that they reconsider this recommendation — not just for the personal income tax returns, but for all returns and payments that would be due April 15,” said NCCPAP.

On Friday, AICPA president and CEO Barry Melancon also reiterated his desire for the IRS and the Treasury to extend the due dates for estimated payments and filings. “Small businesses hold the key to rebuilding our nation’s economic infrastructure as cities and states slowly begin to re-open,” he said in a statement. “The IRS’ decision to intentionally omit estimated payments — a method used by millions of small business owners — in the deadline extension announced yesterday is deeply concerning. The challenges facing businesses today are significant. They have suffered greatly as a result of the pandemic and are fighting every day to keep their doors open and their staff employed. We appreciate the difficulties experienced by the IRS as it navigates the complexities caused by the COVID-19 pandemic. Small businesses nationwide are also dealing with these hardships. The AICPA emphatically calls on the IRS to include estimated payments and all other filings due April 15 as part of the deadline extension. Absent IRS action, the AICPA encourages Congress to take action to extend the deadline to June 15.”

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