COVID-19 & Taxes: How Does the IRS Respond to Emergencies?
President Donald Trump recently declared a national emergency as a result of the new coronavirus. State officials throughout the country have declared states of emergency and local counties and cities are doing the same.
These actions have triggered an array of federal, state and local assistance programs, but have they impacted taxes?
The impact of the new coronavirus on taxes: Two potential ramifications
At this time, taxes have not changed. However, two potential changes we may see in the near future include:
- Filing deadline.The Internal Revenue Service (IRS) is expected to announce a possible change to the annual filing deadline. President Trump and lawmakers throughout the country have supported this change. Two Congressmen, one from New Jersey the other from Michigan, recently wrote to the IRS officially calling on the agency to provide a three-month extension from the April 15 deadline.
- Potential relief.The use of the Stafford Act by President Trump to declare a national emergency could also extend to administrative tax relief for taxpayers. This could mean the agency would waive penalties and interest charges normally associated with late filings.
Even without the Stafford Act triggering additional relief, taxpayers could likely make use of existing tax benefits to balance out some losses that result from the new coronavirus pandemic. This can include deductions for business losses and payment plans for those who are unable to manage their tax debt this year. Those who are struggling with their tax debt may also qualify for an offer in compromise. An attorney experienced in tax collection matters can review your situation and discuss the benefits and risks of various options.