OKLAHOMA CITY (KFOR) – Americans have been granted federal income tax payment relief for 90 days.
Treasury Secretary Steven Mnuchin announced Tuesday afternoon that the government will move the April 15 payment date to July 15 in hopes of people and businesses being able to use that money elsewhere if needed during the coronavirus pandemic.
“The president has instructed me we have to do this now, so this is now,” Mnuchin said.
It will also be penalty and interest-free until it has to be paid in July. To be clear, you still have to file by April 15. In fact, the government is still urging people to file as early as possible to get their tax returns. However, you don’t have to pay what you may owe until July.
Local tax attorney’s like Rachel Pappy with Polston Tax Associates say the move is a big one for American citizens.
“I think that’s a wonderful gift because it gives people a cushion of time, 90 days, three months, more or less, to keep their cash in their pockets,” Pappy said.
This only applies to federal tax right now. Some states are making changes, but we are still waiting on an update from Oklahoma. Corporations can defer up to $10 million in federal income tax payments. Individuals can defer up to $1 million in federal income tax payments, which also covers small businesses. According to Pappy, this will allow businesses to keep money in their pockets, for now.
“It’s the cycle of a nightmare,” she said.
Businesses around the country and in Oklahoma are shutting down to keep coronavirus from spreading. Some are only opening for certain operations, such as restaurants opening for delivery and takeout orders. This could cause businesses to lose customers, and in turn, lose money.
“It’s not an instant flip of a switch and it’s turned back on – it takes months of recovery,” Pappy said.
With not as much income rolling in, plus having to pay bills and some employees due to the Families First Coronavirus Response Act, money could run short. It might force them to dig into the deferred tax payment they were supposed to pocket that they will still owe in 90 days.
“Where’s this additional cash going to come from this loss of profits over the last few months,” Pappy said.
Then, it would force them to deal with problems after the virus is contained and the pandemic is over.
“Then they will be faced with, are their employees still there? Are they still working for them?” Pappy said. “Are they able to pick up the pieces?”
There have been discussions in Washington about stimulus payments of $1,000 to American citizens. Mnuchin said this could take place in the next two weeks, although it is unknown at the time how that will roll out and what the criteria will be to qualify for the money.