The Internal Revenue Service (IRS) has issued a press release officially extending the federal individual tax filing deadline from April 15, 2021, to May 17, 2021. The extension comes after weeks of speculation that the deadline would again be moved for this tax season and the delayed start of this year’s filing season to February 12. The 2019 filing season was extended to July 15, 2020, due to the ongoing COVID-19 pandemic.
The new filing deadline allows individual taxpayers to postpone their federal income tax returns and income tax payments without the need to file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.
Tax professionals have been recommending the filing deadline extension as the IRS struggles to keep up with current returns being filed and distributing funds for the American Rescue Plan stimulus funds amid the ongoing pandemic. As of March 5, 2021, many news outlets reported that the IRS had received 55.7 million returns and had processed 49 million returns. According to multiple sources, total refunds were down 32% compared to the prior season.
Too little, too late?
But is the new deadline enough time? According to the IRS press release, the relief does not include estimated tax payments due on April 15. The extension does not extend to small business owners and individuals who pay estimated taxes and Trust income tax payments and return filings on Form 1041 and Corporate income tax payments and return filings on various Forms 1120.
AICPA released the following statement in response to the filing extension:
“The COVID-19 pandemic has created immeasurable hardship for millions of taxpayers and tax practitioners, making it incredibly difficult for them to meet the April 15th filing and payment deadline. The IRS must not overlook the impact the pandemic has had on this year’s tax filing season.”
“In the midst of a global pandemic, parents are straining to balance remote work with educating their children at home and businesses are struggling to remain open.”
“Even the IRS – faced with a significant mail processing backlog, a delayed start of the 2021 tax season, inundated phone lines, and a new round of COVID-19 relief payments – is overwhelmed. Denying a postponement of this filing and payment deadline disregards and further exacerbates the continued difficulties being faced by these families and businesses.”
“Opponents of a deadline postponement fail to consider that while any taxpayer has the ability to file for an extension, the process can itself be unduly burdensome:
- Taxpayers must properly estimate their 2020 tax liability using the information available to them when preparing the request for extension on Form 2848
- Taxpayers who do not pay the correct amount of tax with the extension request will owe interest and possibly penalties
- If taxpayers do not compute a “proper” amount of tax on their extension request, it can be deemed invalid by the IRS”
“In reality, the extension filing process can be very challenging, even for those not dealing with the pandemic, as gathering and computing the extension payment requires nearly as much work as filing a return.”
“AICPA also understands the revenue dilemma many states face; a payment and filing deadline postponement to June 15th would still help many states maintain revenue levels within their current fiscal years. Most states should be able to adopt a similar deadline to the federal deadline should they choose to.”
“To claim there are no issues with retaining the April 15th filing and payment deadline does not reflect the taxpayers’ perspective. We must not minimize or trivialize the hardships of taxpayers and tax professionals or the urgent need for deferment from an arduous filing environment.”
Are you wondering how the filing extension will affect your return? We welcome the opportunity to put our tax expertise to work for you. To learn more about how our firm can help advance your success, please contact Dave Wolfenden or Kathy Corcoran at (302) 254-8240.
