Tax Day postponement to July 15 'welcome news' for small business

Source: https://tinyurl.com/s88ycdo

Author: Jane Thier@thier_jane

Dive Brief:

• On Friday morning, Treasury Secretary Steve Mnuchin shared on Twitter that Tax Day would be pushed back from April 15 to July 15 as the nation attempts to cope with the impacts of coronavirus. Shortly after Mnuchin tweeted, the Internal Revenue Service announced the postponement officially.

• "At @realDonaldTrump’s direction, we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties," Mnuchin wrote. "I encourage all taxpayers who may have tax refunds to file now to get your money."

• The decision comes after widespread complaints about the Trump Administration’s previous plan, announced earlier this week, to give people who owe the IRS an additional 90 days to pay, without penalties or interest, while still requiring them to file their returns by April 15, NBC News reported.

Dive Insight:

Per the IRS’ online announcement, the filing deadline for tax returns remains April 15, 2020. The office urges taxpayers who are owed a refund to file "as quickly as possible."

In its Wednesday announcement on the initial 90-day delay, the Internal Revenue Service cautioned that the delay applied only to federal income taxes, not state income taxes.

"Taxpayers also will need to file income tax returns in 42 states plus the District of Columbia," the agency said on its website. "State filing and payment deadlines vary and are not always the same as the federal filing deadline. The IRS urges taxpayers to check with their state tax agencies for those details."

Mnuchin had said Wednesday that, in light of the crisis, individuals can delay paying up to $1 million in tax payments and corporations can defer payments on up to $10 million. During the deferment period, neither individuals nor corporations would be subject to interest or penalty payments, he said.

The revised delay is another part of the government’s effort to keep $300 billion in the economy as individuals and corporations alike grapple with an unprecedented financial upset caused by the coronavirus.

As non-essential businesses are ordered to temporarily close and consumer spending dries up, many small business owners are struggling to keep their cash flow and revenue up to par, as well as retain their staff and provide for their customer base.

"Small business owners right now are dealing with enormous change and business continuity challenges," Jared King, co-founder CEO of automated accounts receivable software service Invoiced, told CFO Dive Friday. "So filling and paying taxes is really the last thing they need, given the circumstances."

King believes that for small businesses, the delay may be a lifeline in a situation that would otherwise have them risking bankruptcy.

"Deferring this year's tax preparation and payment will be welcome news for just about any small business, as it will give them a temporary cash management advantage to make payroll, cover supplier payables and continue operations," he said.

He clarified that putting aside concerns about paying and filing taxes on time would create the space to address more urgent concerns. "Perhaps more importantly," King said. "The ability to just not deal with taxes while they face other more existential challenges will be key."

In response to the pandemic, Invoiced is currently offering its accounts receivable automation function to nonprofits organizations for free. The program took effect last week and will continue being free for up to six months.