President Trump said in an Oval Office address Wednesday night that he would allow individuals and businesses to “defer tax payments without interest or penalties,” and he urged Congress to cut payroll taxes as part of a set of measures aimed at providing relief during the coronavirus pandemic.
“Using emergency authority, I will be instructing the Treasury Department to defer tax payments, without interest or penalties, for certain individuals and businesses negatively impacted,” he said during a prime-time address. “This action will provide more than $200 billion of additional liquidity to the economy. Finally, I am calling on Congress to provide Americans with immediate payroll tax relief. Hopefully they will consider this very strongly.”
The tax deadline falls on the traditional April 15 due date, and although the Treasury and the IRS have not yet issued a formal announcement, they have deferred the date in the past, as when the IRS computer servers couldn’t handle a surge of last-minute tax filings.
Treasury Secretary Steven Mnuchin told lawmakers earlier Wednesday during a House Appropriations Committee hearing that he supports extending the tax deadline beyond April 15, according to
“We think we can provide over $200 billion of liquidity into the economy by delaying certain tax payments,” Mnuchin said.
Trump also said he would provide relief through the Small Business Administration to businesses hit by coronavirus. “I am instructing the Small Business Administration to exercise available authority to provide capital and liquidity to firms affected by the coronavirus,” he said. “Effective immediately, the SBA will begin providing economic loans in affected states and territories. These low-interest loans will help small businesses overcome temporary economic disruptions caused by the virus. To this end, I am asking Congress to increase funding for this program by an additional $50 billion.”
Trump also wants Congress to pass a payroll tax cut similar to the one granted after the financial crisis. However, lawmakers are viewing that proposal skeptically.
“The best way to prevent economic damage is to stop the spread of the virus,” said Sen. Ron Wyden, D-Ore., the top Democrat on the Senate Finance Committee, in a statement prior to the speech. “President Trump isn’t going to wriggle out of addressing this growing public health crisis with tax cuts. A payroll tax cut can be an effective tool, but it’s not the best answer in this case. A payroll tax cut would do little to help workers without paid sick days or those who have lost shifts and tips.”
Democrats on the tax-writing House Ways and Means Committee sent a letter Tuesday to IRS Commissioner Charles Rettig asking about pushing back the tax deadline.
“Specifically, we are concerned about the ability of the IRS to provide taxpayer assistance and process returns, as well as the ability of taxpayers, free tax preparation sites, and tax professionals to meet the filing deadline,” said a
Along with requesting an evaluation of whether the April 15 filing deadline needs to be extended this year, the Democrats asked Rettig to consider the need for relief from some of the filing and payment penalties for taxpayers and communities affected by coronavirus.
On Wednesday, the American Institute of CPAs requested a delay in the tax deadline, along with other tax relief steps to provide relief to all taxpayers in the midst of the pandemic. The AICPA asked the Treasury and the IRS to extend certain deadlines falling on or after March 15, 2020 and before Oct. 15, 2020 to give individuals more time to file their taxes and make payments through Oct. 15, 2020.
The AICPA wants an automatic extension to Oct. 15, 2020, without the need for taxpayers to file any forms or request an extension. The Institute also asked the Treasury and the IRS to waive late payment penalties if at least 70 percent of an individual’s current tax due is paid by April 15, 2020, and to waive interest through Oct. 15, 2020. The AICPA also requested the Treasury and the IRS to waive underpayment penalties for 2020 estimated tax payments if they’re paid by Sept. 15, 2020, as well as to extend the IRA contribution deadline.
For businesses, the AICPA asked for broad tax relief, requesting the Treasury and the IRS to extend certain deadlines falling on or after March 15, 2020 and before Oct. 15, 2020, to give businesses extra time to file and make payments through Oct. 15, 2020. For businesses too, the AICPA asked for an automatic extension without the need to file any forms or request an extension, and for the Treasury and the IRS to waive late payment penalties and interest through Oct. 15, 2020. The AICPA also asked the Treasury and the IRS to provide appropriate relief for all businesses and tax-exempt organizations regarding elections and filings (including payroll, excise tax, and more).
“We are hearing from our members that they and their clients are experiencing great uncertainty about this year’s tax filing season,” said AICPA vice president of taxation Edward Karl in a statement Wednesday. “Our recommendations will help give taxpayers, large and small, much needed relief in the midst of this fast-moving emergency situation. We continue to closely monitor the coronavirus pandemic and thank the Treasury Department and IRS for their commitment to the welfare of all taxpayers.”
