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Delayed Tax Filings & Payments

Tax Delays

In the case of delayed tax filings and payments, who is offering them, and should I wait to file and pay?

The coronavirus pandemic has taken a toll on the economy, and the effects have been undoubtedly felt across the world.

Due to the widespread economic hardships that have resulted from the stay-at-home orders and social distancing protocols to prevent the spread of COVID-19, many U.S. tax agencies are allowing additional time for taxpayers to file returns and make payments.

Both the Internal Revenue Service (IRS) and the California Franchise Tax Board (FTB) have extended their filing deadlines to July 15, 2020 from April 15, 2020 for individual taxpayers.

The payment deadline has also been extended by both agencies. The extension is automatic. You do not need to do anything to receive the extension. If filing an extension, however, the deadline remains October 15, 2020.

The IRS and the FTB are both adhering by a hold on collections until the extended deadline of July 15, 2020, given the statute of limitations to collect on the account will not expire in 2020.

This means that you are not required to make any payments, including installment agreement payments, to the IRS or the FTB until July 15, 2020. Additionally, the IRS and the FTB will not file any levies or liens due to nonpayment during this time. (Note: Any levies or liens filed prior to March 2020 will be enforced.) To cease direct debit installment agreement payments to the IRS and the FTB, you will need to contact your bank directly and ask them to hold payments until July 15, 2020. If you are unsure if you are eligible for this hold, our office can help!

The California Department of Taxes and Fees Administration (CDTFA) has also granted a three-month extension to taxpayers who file returns reporting less than $1 million in taxes.

This extension is also automatic, and you do not need to do anything to receive it. See your new due date here: https://www.cdtfa.ca.gov/services/extensions-to-file.htm. If you’ve just completed a CDTFA audit and a Notice of Assessment has not been issued, you can request a hold on billing with the CDTFA. This means that although interest continues to accrue, a collection notice may not be issued and you will not be required to pay until a future date set by the CDTFA. This is especially helpful for retailers simply trying to keep their doors open.

In the case of the California Employment Development Department (EDD), no extensions have been granted to file payroll returns or pay payroll taxes.

They have also not issued any formal hold on collections. However, EDD is evaluating 60-day holds on collections (installment agreement payments, levies, liens, and negotiations) on a case-by-case basis. To apply for the hold, you must submit a request in writing and include the reason for your request. If you need help with this request, feel free to contact our office!

Although these agencies are offering extensions to help business owners and individuals during these tough economic times, you may be wondering whether or not you should still continue to make your payments as scheduled and file your returns on time.

In general, it is always better to continue making payments and filing on time if you are able. These tax agencies have set these protocols in place to help in the event a taxpayer is unable to file their returns or make their payments. Although each tax agency may extend the deadline to file and pay taxes, interest will continue to accrue, and you will need to be absolutely certain that any installment agreement payments begin at your first scheduled payment date following July 15, 2020 (for IRS and FTB) to avoid defaulting on the agreement.

Regarding property taxes, please refer to your local county tax collector’s website. As of April 19, 2020, San Diego County has not offered any extensions to pay, but has provided some guidance regarding penalty abatements for late payments. If you do not reside in the State of California, please refer to your state’s website regarding any extensions and collections holds that may apply to you.