The IRS and the Massachusetts DOR have both indicated that they have approved an extension of time to file the Federal and Massachusetts Individual Income tax returns until May 17, 2021. Currently this does not include the 2021 Estimated tax payments which are still due on April 15, 2021 as of this writing. This means that for persons who must make estimated tax payments, the return extension to May 15 is not helpful as the return must be completed by April 15 in order to calculate a safe harbor estimate for 2021 taxes. Also, no extensions have been made for other returns due on April 15 including corporations, trusts, estates, nonprofit or information returns.
The American Institute of Public Accountants (AICPA) along with other professional organizations are urging taxing authorities to consider changing the due date for ALL returns due on April 15 to June 15, 2021. Below are excerpts from the letter the AICPA sent to the IRS on March 4, 2021:
“We now urge Treasury and the IRS to act immediately to provide tax filing and payment relief for taxpayers and tax professionals affected by the ongoing pandemic. Specifically, we request that all 2020 Federal income tax, information returns, and payments (e.g., extension and estimated payments) originally due April 15, 2021 be granted additional time to file and pay until June 15, 2021.
Though we are concerned that a postponement of the filing and payment deadlines will create additional burdens on taxpayers and tax professionals, such as systemic failures in processing the extended returns and subsequent erroneous notices, the AICPA is compelled by surrounding circumstances to request a postponement until June 15, 2021. Those circumstances include:
- A delayed start of the 2020 filing season. Many IRS forms are still not available for electronic filing which has also caused a state delay in releasing forms.
- A second round of Paycheck Protection Program (PPP) loans that required a significant amount of assistance to small business clients. Also, a challenging rollout of the program added to the burdens. Tax professionals continue to assist clients with the PPP first draw loan forgiveness process.
- Changes to the Employee Retention Credit (ERC), which required possible amendment of 2020 payroll tax returns prior to filing 2020 income tax returns, so that the gross income accurately reflects the ERC amount.
- A delayed processing by the IRS of 2019 returns that resulted in a rash of erroneous notices.
- Effects on IRS’s staffing, due to the Coronavirus, that affects its ability to respond to questions and notices and generally to provide taxpayer assistance.
…Maintaining the April 15 filing and payment deadline does not reflect the real-world hardship and challenges imposed on taxpayers and tax professionals. Therefore, we urgently request that the 2020 Federal income tax, information returns, and payments (e.g., extension and estimated payments) originally due April 15, 2021 be granted additional time to file and pay until June 15, 2021.”
In the coming days, State taxing authorities will weigh in on whether or not they will conform to the IRS due date changes. We will keep you up to date as information becomes available.
Should you have any questions, please don’t hesitate to reach out to your tonneson + co representative.