The Treasury Department and IRS have postponed the federal income tax filing date, but our client’s state is another matter.
Taxpayers can now defer federal income tax filings and payments until July 15 without penalties and interest “regardless of the amount owed,” the IRS said on March 21. “This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax,” the agency added.
Many states have said they’ll conform to the federal postponement; others have legislation pending. Still others have announced no changes at all.
“Each state is handling relief a bit differently,” said Patrick J. Duffany, committee chair with the Connecticut Society of CPAs and tax managing partner in the Hartford, Conn., office of CohnReznick. His state’s filing deadline has been pushed to July 15 for personal income tax and estimated payments for the first and second quarters of this year.
The fragmented approach has made this tax season tough on preparers as well as on their clients. One problem: recent blanket work-at-home orders. Accounting firms “desperately” wanted more time to file at both the federal and state level “as they transition their employees from [the] office to working remotely,” said Julio Gonzalez, CEO of Engineered Tax Services in West Palm Beach, Fla.
“As soon as the severity of the pandemic became real, I filed automatic extension requests for all my clients,” said John R. Dundon II, enrolled agent and president of Taxpayer Advocacy Services in Englewood, Colo.
“I likened my feelings to a kid waiting to hear if tomorrow would be a snow day,” said Joe Musumeci, a CPA and partner at Rowles & Company in Baltimore. Maryland is conforming to the federal extension for state returns of individuals and businesses, including for sales and use tax filings.
“The uncertainty paired with a lack of relief was at least distracting—and at most dangerous,” Musumeci said.
“As this gets out to the public we will start to get more questions from our clients,” said Michael Eisenberg, a CPA/PFS with Squar Milner in Encino, Calif. California has also changed to July 15 filing and payment deadlines for individuals and businesses, first- and second-quarter estimated tax payments and LLC taxes and fees, among others.
States that have announced extensions at this time include the following: