April 15, 2020
Today is April 15. So? This is the oddest April 15 in the memory of any living tax practitioner. No extensions are due. No federal first quarter payments. Except for a few states, all calendar-year tax return filings are now due July 15.
Yet there are a few things due today - primarily first quarter state payments. First quarter estimated payments are due today in some states, including Arkansas, Illinois, Minnesota, and Oregon. District of Columbia first quarter 2020 payments are also due today. Hawaii first-quarter 2020 payments remain due April 20. Iowa first quarter payments are still due April 30.
While income tax deadlines are generally extended, many other tax deadlines are unchanged or have shorter extensions. Details are available from our state and local team at State and Local Responses to the COVID-19 Pandemic.
IRS Expands Tax Filing Relief
New Rule Provides Partnership Guidance in PPP Loan Abyss - Eric Yauch, Tax Notes: "A second round of guidance on the new loan program aimed at keeping people working during the economic downturn shows how self-employed individuals can take advantage of the program but introduces new limits on partners and leaves many questions unanswered."
The Small Business Administration guidance is here. It provides rules for how self-employed taxpayers compute the amount of loan eligible for forgiveness under the program. It also provides that partners with self-employment income cannot file for the loans separately from the partnership.
Related: What You Need to Know About the SBA Loan and Relief Efforts
Guidance on PPP Loans for the Self-Employed is Helpful, but Incomplete - Kristine Tidgren, Ag Docket.
Are Gigsters Frozen Out Of SBA Disaster Relief? - Peter Reilly, Forbes.
SBA Finally Issues Guidance on Self-Employed Individuals and Partners Under the PPP Loan Program - Ed Zollars, Current Federal Tax Developments.
A Review of Net Operating Loss Tax Provisions in the CARES Act and Next Steps for Phase 4 Relief - Garrett Watson, Tax Policy Blog:
The goal of business income taxation is to tax a firm’s net income, ideally in a consistent manner over time. However, some businesses and industries may have more volatile profitability than others, which may lead to inconsistent tax treatment over time without an NOL deduction. For example, imagine a firm in a volatile industry that has a $50,000 loss in year one and makes $100,000 in net income in year two. A second firm makes an even $25,000 in both years, so both firms have the same combined net income over those two years ($50,000).
Without an NOL deduction, firm one pays a higher effective tax rate than firm two: a 21 percent tax on $100,000 in net income for year two despite only a $50,000 net over the past two years. This penalizes firm one for having more volatile profits than the second firm.
Without NOL carrybacks, businesses with volatile income pay taxes in excess of the statutory rate - or even in excess of their income over time.
Net Operating Losses Aren’t Handouts - Nicole Kaeding, National Taxpayers Union Foundation. "Spurred by a flawed article from The New York Times, commentators keep describing a provision from the Coronavirus Aid, Relief, and Economic Security (CARES) Act as a handout for the rich. That characterization is misguided, to say the least."
FAQ Coming on Like-Kind Exchange Extensions - Kristen Parillo, Tax Notes. "The IRS is putting together a FAQ that will clarify the recently announced extension of deadlines for completing like-kind exchange transactions."
Estimated tax payment deadlines have changed, but you still have calculation options - Kay Bell, Don't Mess With Taxes. "That delay is good for our cash flow, at least here in April. But talk to me in July when two estimated tax payments for a decent first few earnings months of 2020 and any 2019 taxes are due all at once."
Stimulus payments for the most financially vulnerable - Nina Olson (Retired Taxpayer Advocate), Procedurally Taxing. "While handing out money sounds like a useful policy response, it is ultimately an inefficient and unfair way to manage the disastrous consequences of this public health crisis on households’ well-being."
April 15th Deadlines - Russ Fox, Taxable Talk. "Yes, the tax deadline for the IRS (and federal estimated payments for the first two quarters) is July 15th. However, not all states conformed to this–especially for estimated payments."
Looking For Your Stimulus Check? New IRS Tool Now Lets Tax Filers Update Direct Deposit, Track Progress - Kelly Phillips Erb, Forbes.
Expect Long Delays In Getting Refunds If You File A Paper Tax Return - Janet Holtzblatt, TaxVox. "Today’s advice: If you have not yet filed your federal income tax return, do not—repeat, do not—send the Internal Revenue Service a paper return—especially if you are expecting a tax refund or want a COVID-19 recovery rebate based on your 2019 income."
Audit: Southeastern Iowa deputy city clerk pocketed cash utility payments - Philip Joens, Des Moines Register. "...a scheme where she paid utility payments made by city residents with cash by using money from other city payments made with checks"
Related: Why You Need to Understand the Importance of Forensic Accounting - Brook Schaub, Eide Bailly.
Today is the first April 15 that hasn't been a tax deadline (ignoring weekends and holidays) since 1954. The first filing deadline for the modern income tax was March 1, 1914. The Tax Notes Tax History Project explains how due dates have changed over time.
This is a roundup of tax news and opinion. Any opinions expressed or implied are those of the author and not necessarily those of Eide Bailly. Opinions found in linked items are those of the authors of the linked item, not of your bloggers or of Eide Bailly. “$” means link may be behind a paywall. Items here do not constitute tax advice.