Declaration of Federal Coronavirus Emergency Leads to Postponement of Tax Deadlines

The world has had to learn a new vocabulary in recent weeks. In an effort to slow the spread of the coronavirus and the disease it causes, COVID-19, public health officials across the globe have urged people to practice “social distancing.” Non-essential businesses are closed, and thousands if not millions of people have quickly learned how to work remotely. In the midst of all of this, the federal government has offered some relief by delaying Tax Day for three months. Instead of income tax returns and payments being due on April 15, they will now be due on July 15.

Why April 15?

April 15 has been the due date for federal income taxes for a little less than seventy years. Income taxes themselves have only been an inevitable part of life nationwide for a bit more than a century.

The Sixteenth Amendment to the U.S. Constitution first authorized the federal government to levy an income tax in 1913. Eight years earlier, the Supreme Court had ruled that an income tax contained in a tariff bill was unconstitutional. Amending the Constitution overruled the court.

The deadline to file was initially March 1. The Revenue Act of 1918 pushed the date to March 15. Congress passed a major overhaul of the federal tax system in 1954, creating what we know as the Internal Revenue Code (IRC). This included the designation of April 15 as the due date for taxes and tax returns.

Extensions of Tax Deadlines

The IRC allows the Secretary of the Treasury, and by extension the IRS, to grant a “reasonable extension of time” to file a tax return. They may also grant an extension of the deadline to pay taxes owed. In either case, the IRC states that extensions for federal income tax may not exceed six months.

The IRS provides forms taxpayers can use to request an extension of time. Form 4868 allows taxpayers to request an automatic six-month extension of the deadline to file Form 1040, pushing the deadline back to October 15. In a normal year, tax payments would still be due by April 15. So far, 2020 is not a normal year.

Federally-Declared Emergencies

The federal government has another method for extending deadlines and due dates in extraordinary circumstances. The IRC allows extensions for up to one year in the case of a federally-declared emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988. This law gives the U.S. president the authority to declare an emergency in a particular area, such as an area affected by a hurricane or earthquake, or nationwide. On March 13, the president declared a nationwide emergency.

2020 Tax Deadlines, Hopefully Post-Coronavirus

The extensions of the tax deadlines occurred in several stages. The Treasury Department declared on March 18 that individuals could defer payment of up to $1 million in federal income and self-employment taxes until July 15. Corporate taxpayers could defer up to $10 million in taxes until that date. Officials later lifted the cap on the deferral amounts, meaning that all tax payments are deferred until July.

The Treasury Department announced on March 20 the extension of the deadline to file income tax returns until July 15. This extension is automatic, but taxpayers can still use Form 4868 to request a further extension for their returns.

The Enterprise Consultants Group’s tax advisors are available to assist you with your questions and concerns about taxes. Please contact us today online or at (800) 575-9284 to discuss your case.

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