We have all been negatively impacted by the COVID-19 pandemic and resulting stay at home orders. I am reaching out to you share some information as a result. I understand that completion of your tax return is very important to you. You expect quality work done in a timely manner, and it is always my goal to provide that to you. There has been a lot of discussion about taxes and deadlines in the media, some of which is not fully explained. This letter will help you better understand the circumstances under which we are operating with regards to your 2019 taxes.
For your convenience, I had a vertical package slot added to the left side of my entry door. Please place any information inside an envelope before dropping it through the slot. Someone is here at some point most days as we are considered an essential business under NC’s stay-at-home declaration.
- IRS has postponed the due date for 2019 individual returns to July 15, 2020. As far as the federal government is concerned, for individual income tax purposes, April 15th is no different than April 12th, March 3rd, and so on. The first filing deadline is July 15, 2020. No black mark will go on your record if you file or pay by that date. Yes, if you go to the IRS website you will see the IRS refers to it as extended to July 15th but if you read the actual notice, which controls, the due date is postponed.
- Filing before July 15 does not mean you have to pay when you file. The payment due date is still July 15th.
- If you were supposed to pay estimated income taxes for 2019 and did not pay them, then paying today will reduce the underpayment of estimated tax penalty but that is different than a late payment of the tax penalty. If you underpaid your 2019 taxes either by not having enough withheld or by not making the appropriate estimated payments, you will likely owe an underpayment penalty; paying sooner rather than later will help to reduce that penalty. This is the case regardless of the date of the filing deadline and is not the same as a late filing penalty.
- NC also has postponed the individual filing due date for 2019 returns until July 15, 2020. However, current NC law does not allow the Department of Revenue to waive interest on payments that are made after the April 15th due date. If you do not owe tax, you will not owe interest. NC’s leaders have pledged to waive the interest and you can read their statement here:
- Generally, other states are following the IRS in delaying the due date for their returns, but some are stuck with the same situation as NC (i.e. legislation must be changed) and some have chosen their own path. This is a rapidly changing area.
- For those who pay estimated income taxes, the first quarter 2020 IRS estimate is due July 15, 2020. The second IRS estimate is now also due July 15, 2020. Again, NC law does not allow the NC Department of Revenue to postpone estimated tax deadlines. NC’s leaders have pledged also to waive this requirement.
Tax and SBA changes
- Congress passed and the President signed on March 18th the 43-page Families First Coronavirus Response Act to provide coronavirus funding and some tax relief.
- Congress passed and the President signed on March 27th the 880-page CARES Act providing expanded unemployment benefits, various small business loan programs, tax law changes and relief, recovery rebates ($1,200 single $2,400 joint, with limitations), and various other provisions.
- Another bill is already under discussion.
- Before these laws passed, various other proposals were floated that did not end up in the law, but they generated a lot of questions from clients.
- Keeping up with the adopted changes, potential changes, and responding to questions has taken time from my day that would normally have been dedicated to completing returns. I am still dedicating time to studying these laws and keeping up with the new guidance that is issued almost daily. This allows me to be of better service to you and allows you to take advantage of the various relief components that apply to your individual circumstances.
- Staff availability has been limited by school closures, requiring me to complete more of the business bookkeeping required to complete tax returns for business clients. This too reduces my availability to complete individual returns.
- Many businesses, even those deemed essential, are suffering economically. They need my help applying for the Paycheck Protection Program (PPP) Loans/Grants and the Economic Injury Disaster Loans (EIDL) to put them in the best position possible to keep their businesses solvent Again, this pulls me away from completing individual returns at this time.
In addition to the work priorities described previously, there are clients who need to promptly file 2019 returns because they are now unexpectedly unemployed. While it may seem unfair, I am prioritizing clients based on these needs and I am asking those of you that are less negatively impacted to understand.
I am asking for your patience in this difficult time. While I wish I could get everyone’s returns done now, it is not physically possible. Thank you for your understanding.