Posted by Abundant Wealth Planning LLC

IRS Extends Filing Deadline and Unlimited Tax Deferral

IRS Extends Filing Deadline and Unlimited Tax Deferral

As the number of COVID-19 confirmed cases continues to increase in the United States, the federal government is taking steps to reduce the impact on taxpayers. In particular, the Internal Revenue Service (IRS) has officially announced that the deadline for paying taxes has been extended to July 15, 2020.

According to the reports on the media, on March 13, 2020, President Trump declared an emergency declaration under Robert T. Stafford Disaster Assistance and Emergency Assistance Act, in response to the ongoing coronavirus disease in 2019 (COVID -19) pandemic (Emergency Declaration). The emergency declaration directed the Secretary of Treasury "to provide tax exemption to Americans who have been affected by the occurrence of COVID-19, as required, per 26 USC 7508A (a)."

COVID-19 is the official name of the last infectious disease discovered caused by the coronavirus. According to the WHO, as of March 28, 2020, 472,259 cases of COVID-19 had been confirmed in 164 countries. According to the data released, the United States has 108,431 confirmed cases with cases reported from all states.

The law establishes:

"In the case of a taxpayer determined by the Secretary to be affected by a federally declared disaster (as defined by section 165(i)(5)(A)) or a terroristic or military action (as defined in section 692(c)(2)), the Secretary may specify a period of up to 1 year that may be disregarded in determining, under the internal revenue laws, in respect of any tax liability."

Following the declaration of emergency, anyone whose payment of federal income tax is due on April 15, 2020 (the normal due date for the tax reporting season) may be eligible for relief. This means that the due date for payment of federal income tax due on April 15, 2020, has now been extended to July 15, 2020.

    •    The amount eligible for the deductible for most taxpayers can reach $ 1,000,000, regardless of marital status. This means, for example, that the exemption is essentially a declaration, which grants the same thing to a person and to spouses who file a joint declaration.

    •    The amount that can be claimed for each consolidated group (as defined in article 1.1502-1) or for each C Corps, which does not meet to submit a unified statement, is $ 10,000,000.

Accrued interest, fines, and expenses will accumulate taxes higher than amounts due but not paid before April 15, 2020.

    •    The exemption applies to federal income tax payments, including self-contained income tax payments due April 15, 2020, for fiscal 2019.

    •    The exemption also applies to estimated federal income tax payments, including self-employed income tax payments, for April 15, 2020, for the financial year 2020.

    •    The exemption does not extend to the payment or deposit of any other type of federal tax.

The initial exemption was applied to the completion of any tax declaration or information declaration.

The IRS and the Treasury have extended the deadline for filing taxes until July 15, aligning the due date with the extended payment deadline.

The guide released Friday will give taxpayers and consultants facing the Covid-19 pandemic more time to prepare their tax returns. It also allows unlimited deferral of tax payments to individuals and legal persons for these three additional months.

    •    The communication replaces and expands the above guidelines, which has given taxpayers more time to pay taxes, but not to file.

    •    This guide allowed people to carry over up to $ 1 million and businesses up to $ 10 million to pay interest and fines without interest. The new guide has no limits.

    •    The lack of extension of the filing in accordance with the initial notice led to an adverse reaction from tax preparers, business groups, and parliamentarians who argued that they had two separate conditions and rules for the filing and paying taxes. It would likely confuse taxpayers.

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