WASHINGTON (Reuters) – The U.S. government will give individuals and companies an extra three months to file their 2019 tax returns, extending the deadline to July 15 amid the coronavirus outbreak.
FILE PHOTO: U.S. Treasury Secretary Steven Mnuchin testifies before a Senate Finance Committee hearing on the President’s FY2021 Budget on Capitol Hill in Washington, U.S., February 12, 2020. REUTERS/Yuri Gripas/File Photo
“All taxpayers and businesses will have this additional time to file and make payments without interest and penalties,” Treasury Secretary Steven Mnuchin said in a Twitter post on Friday.
“I encourage all taxpayers who may have tax refunds to file now to get your money.”
On Wednesday, Treasury and the Internal Revenue Service postponed until July 15 the deadline for individuals and corporations to make most tax payments with no penalties or interest. On Friday, the filing deadline was also extended from the original April 15.
“This will avoid a lot of confusion,” said Mark Jaeger, director of tax development at TaxAct, a provider of online tax preparation and filing services.
He said the comprehensive three-month extension was unprecedented, although the IRS had previously granted short extensions for specific regions affected by natural disasters. The current income-tax system was put in place in 1913.
Mnuchin this week said the delays would keep about $300 billion of additional liquidity in the economy, giving relief to those hurting from widespread business shutdowns and travel bans due to the pandemic.
He gave no specific reason on Friday for extending the filing deadline, saying only it was done at the direction of President Donald Trump.
Roger Brown, former special counsel in the IRS’s national office, said the decision meant the government would have to wait until later in the year to know how much tax revenues would be hurt by the coronavirus outbreak and economic slowdown.
Brown added that liquidity problems could mean an increase in the already high number of tax bills that go unpaid each year.
For now, individuals would likely still have to observe the April 15 deadline to contribute to their retirement and healthcare savings accounts in order to be able to use them as deductions, said Brown, who is now the head of tax and regulatory affairs for Lukka, a company that provides technology and data services for crypto asset processing.
Brown said Congress could provide additional liquidity to companies and individuals by reinstating a provision that would allow current year losses to be used to reduce the past year’s tax bill. That measure was removed under the 2017 tax bill.
Reporting by Doina Chiacu and Andrea Shalal; Editing by Franklin Paul and Andrea Ricci