No Payments until July
As already mentioned, the payment deferral the IRS is giving will be for 90 days; this pushes the payment deadline out until the middle of July. Based on current projections, the worst of the COVID-19 pandemic should be behind us by then and, hopefully, most people’s lives will have returned normal. This should allow taxpayers to use their current funds to help offset income losses and potential expenses related to this virus.
It is important to note, however, that there is a limit set on the amount that will be deferred. For individuals, up to $1 million of tax debt will be deferred, while up to $10 million will be deferred for businesses. If you owe more than this, you are expected to pay any excess amount by April 15; the remainder can be deferred until July.
This payment deferral is being given automatically to all citizens, so you don’t need to worry about contacting the IRS to receive a payment deferral.
Filing Deadline Extended as Well
Initially, the IRS only extended the deadline for payments on tax debts. However, a few days later, on March 20, they announced that they would also be extending the filing deadline. All taxpayers now have until July 15 to file their tax returns. We still strongly recommend that you file as soon as you possible can. Doing so will allow you to collect any refunds you're due at this difficult time; or, if informs you of exactly how much you owe so that you have time to prepare for the extended payment deadline.
If you need to extend your filing deadline further, you can file a request for a standard extension, which pushes out your filing deadline to October 15. However, if you do so, please be aware that the deadline for paying any taxes you owe will still be July 15. Please reach out to us if you have any questions about this.
Deferral Will Help Flatten the Curve
In addition to offering individuals some much-needed financial relief during these difficult times, the government also hopes that the payment deferral can help to “flatten the curve” and slow the spread of the novel coronavirus throughout our communities. The easement of financial burdens will hopefully enable more people to stay home from work and practice proper social distancing.
Additionally, the deferral relieves some of the pressure of the impending tax deadline for both the IRS and tax preparation companies like ours. At this incredibly busy time of year, pushing back the filing and payment deadline enables tax preparers and IRS employees to work fewer hours or to work from home more frequently, minimizing contact between coworkers. Additionally, we hope that pushing back tax payments will allow more of our clients to rely on remote services, rather than feeling pressured to meet with their accountant in person.
How Is Our Office Impacted?
The accountants here at Kohl & Company are still doing all we can to help you with your taxes and other accounting needs. So, if you have questions or concerns about the payment deferral, need help with filing an extension, or have any other questions about your taxes, we’re still here for you. We simply encourage our clients—especially those at higher risk of being severely impacted by COVID-19—to rely on remote services whenever possible.
We want to do our part to protect the health of our community while still offering you the services you need. So, we encourage you to call us instead of stopping by, and to use our online client portal to deliver your tax documents instead of delivering them in person. Rest assured, we’re still working for you every day; we may just need to do things a bit differently for a while in order to ensure we all stay healthy.
We appreciate your patience and continued business during this difficult time, and encourage you to contact Kohl & Company with any questions or concerns you have regarding your account with us.
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