U.S. taxpayers were given an additional three months to file tax returns this year because of the coronavirus crisis, but even the extra time hasn’t been enough for some businesses struggling to pay the government as the pandemic threatens to worsen.
While the shift to the July 15 deadline was meant to help filers weather disruptions caused by virus-related shutdowns, companies are facing the added problem of navigating a confusing and constantly changing patchwork of disaster relief at a time when the work of the Internal Revenue Service has been slowed along with the rest of the nation’s economy.
“This is the never-ending tax season,” said Steve Rossman, an accountant at Philadelphia-based firm Drucker & Scaccetti. “July 15 is just as bad as April 15, plus there are all these other nuances, like helping clients with their Paycheck Protection Program loans.”
Further complicating matters, many firms that welcomed relief in the spring are now faced with potential cash crunches as multiple bills come due at the same time: any income taxes they owe for 2019, as well as their estimated tax payments for the first two quarters of this year, which were also delayed.
Deadline day comes with the U.S. facing a spike in the number of coronavirus cases in states including Florida and Arizona and steps by some others, such as California, to re-close parts of their economies to try to stem the pandemic. Congress is beginning negotiations to pass another relief bill by early August that could include an extension of unemployment benefits, another round of stimulus checks and more business tax breaks.
Payment Options
The IRS said in a statement Monday that taxpayers should file a return by the July 15 “regardless of whether or not they can pay in full.” The agency offers several payment options, including delayed collection or a process to compromise for a lower liability.
The traditional April 15 deadline was pushed back at a time when companies were living in the nightmare of a broad economic shutdown while trying to navigate a makeshift system for obtaining federal relief, such as PPP loans or payroll tax deferrals. They were met with repeatedly revised rules and a lack of access to professional tax help that left many of them fending for themselves in applying for desperately needed aid, said Rick Lazio, a senior vice president at AlliantGroup, a tax consulting firm.”
“A lot of businesses may not be operating on the latest guidance,” said Lazio, who served in Congress as a New York Republican. “If you don’t have a sophisticated tax adviser, it can be very easy to miss all of the changes.”
The internal watchdog for the IRS acknowledged the concerns facing businesses and other taxpayers in a report released this month.
‘Essential Functions’
“The IRS has not been able to perform many of its essential functions as a result of the pandemic,” the Treasury Inspector General for Tax Administration said in the report. “Trying to balance restarting operations with employee safety will challenge the IRS to provide quality customer service, deliver the filing season and enforce compliance with tax laws.”