March 22, 2021—The National Conference of CPA Practitioners (NCCPAP), an organization representing sole practitioners and small CPA firms across the country, would like to take this moment to thank the U.S. Department of the Treasury and the Internal Revenue Service (IRS) for their announcement last week extending the due date for personal income tax returns from April 15 to May 17, 2021; however, NCCPAP recognizes that work still needs to be done to help both individual and corporate taxpayers.
The announcement made last week was for an extension of the due date for Form 1040 income tax returns for 2020. This announcement did NOT include:
- Estimated tax payments (Form 1040-ES) due April 15, 2021
- Fiduciary tax returns (Form 1041) due April 15, 2021
- Corporate income tax returns (Form 1120) due April 15, 2021
At a recent congressional hearing, when IRS Commissioner Charles P. Rettig was asked about why they were not changing the date of the first estimated tax payment for 2021, his response was, “We do not want to see wealthy taxpayers gaming the system.” There are several problems with this statement.
First, estimated tax payments are not made by just the wealthy. Any individual who is a small business owner is most likely going to have to make estimated tax payments during the year to cover their potential tax liability. Not all business owners are wealthy. Most actually fall into the lower and middle-classes.
Second, for most taxpayers who have to make estimated tax payments during the year, the determination of what their estimated tax payments should initially be is done at the time that their tax returns are being prepared. Allowing the tax return to be filed in May, but still requiring that the first estimate be paid in April does NOT help the taxpayer nor tax return preparer. Instead, it leaves them in the same position that they were in prior to the announcement—having to get the work done in time for the April 15th due date.
Third, changing the due date for one series of tax returns (from a multiple group of returns that are due at the same time) causes a lot of confusion with taxpayers. They hear that they now have until May 17 to submit their personal income tax return and pay the balance due; however, for those that have to make estimated tax payments, if they need to have a fiduciary tax return prepared, they still need to act as if everything is due on April 15, regardless of the announcement by the IRS/Treasury Department. Many tax return preparers are being contacted by their clients about the new May 17 due date, only to be informed that there are still certain forms that have to be submitted by April 15. This does not remove the burden from tax practitioners, it only enhances it.
While it is appreciated that the IRS recognizes that a postponement of the filing date is necessary, this announcement limits those who can actually take advantage of this relief. By failing to include estimated tax payments, fiduciary tax returns, and corporate tax returns in the extension to May 17, the IRS fails to recognize the real-world stresses of the past year that have been imposed on taxpayers, small businesses, and tax practitioners.
Previously, NCCPAP had sent a letter to Treasury Secretary Yellen, IRS Commissioner Rettig and Treasury Deputy Assistant Secretary Mazur requesting that the April 15 due date be extended to June 15, 2021. At this time, in the strongest possible terms, we request that they reconsider this recommendation—not just for the personal income tax returns, but for ALL returns and payments that would be due April 15.
The National Conference of CPA Practitioners (NCCPAP) is a professional organization comprised of Certified Public Accountants practicing in the United States. In addition to serving as a forum for education, networking, and community impact, NCCPAP also advocates for its clients. NCCPAP influences tax administration and tax policy by regularly meeting with Internal Revenue Service representatives, state taxing authorities, and elected officials. NCCPAP members represent over one million businesses and individual clients. The organization is headquartered in Woodbury, NY. For more information visit, www.NCCPAP.org.