Below is a summary of the changes in the federal and North Carolina filing deadlines and payment due dates for certain tax returns and payments. As discussed below, the IRS and North Carolina have deferred the due dates for certain returns and payments. While payments due to the IRS will not accrue any additional penalties and interest during the deferral period, unpaid balances to North Carolina will accrue interest. North Carolina state law currently prohibits the waiver of interest on unpaid taxes. The current North Carolina annual interest rate is 5%. We sincerely hope NC legislators will quickly address this issue and waive the interest on these unpaid balances during the deferral period. However, historically, NC has been slow to react in similar situations, and we may not know their final decision until after the deferral period has ended.
We are still working to get as many returns completed as possible, regardless of deferred deadlines. However, we are sure as this situation evolves, our workflow will most definitely be impacted and impeded. Accordingly, we cannot guarantee that all business returns that were received by March 1, 2020, and all individual returns that were received by March 16, 2020, will be completed by April 15, 2020. We have always worked on returns on a first-in, first-out basis and we have never missed getting all promised returns out by our deadline. We sincerely hope this year is not the first year we miss our April 15th deadline. However, knowing things will continue to change and evolve over the next few weeks, we anticipate some delays. Accordingly, if you are expecting a large refund and would like us to work on getting your return completed to expedite this refund, please let us know. If you have other reasons for needing your return such as lending requirements, please let us know. If you think you will owe a substantial amount of tax and need to have a reasonable estimate of your tax liability regardless of the payment due date, please let us know. We will do whatever we can to accommodate our clients’ needs.
Changes in Operations
We are having to make certain changes in our operations as a result of the Coronavirus:
- We have fewer staff members on-site than normal. Many staff members are working from home for various reasons (childcare, exposure concerns, shelter at home requirements imposed by government officials, etc.).
- We are not scheduling any non-essential meetings with clients.
- We are suspending our Saturday office hours. Our limited staff is making it difficult to accommodate an open-door policy at this time. Accordingly, if you need to pick up or drop off documents on a Saturday, we ask that you schedule an appointment to do so. Staff members will still be working onsite while circumstances allow for such.
- We encourage our clients to use our electronic portal system as much as possible. If you need paper documents delivered, we can make arrangements to mail them to you. If your return was electronically filed and you are only picking up your paper copies and originals, we will be glad to hold those until we all feel it is safe to deliver them to you in person.
- We are able to have video and telephone conferences. If you need to discuss something with us, we are more than glad to arrange a video or telephone conference.
We will continue to post additional information regarding our hours and status on our website and continue to communicate changes in our operations to you as quickly as possible through email and mail. If we do not have an email address for you, our communications with you may be delayed. If you have an email you would like to provide us for such communications, please let us know.
We sincerely hope we all stay safe and healthy during this time. We thank all of our clients for their patience and understanding.
INDIVIDUAL INCOME TAX RETURNS
Internal Revenue Service (IRS)
The US Government has deferred the filing due date for certain tax returns and payments due April 15, 2020. Under the deferred filing schedule all individual tax returns due April 15, 2020, now have an original filing due date of July 15, 2020. This is not considered an extension, and accordingly, you are not required to file any paperwork to take advantage of this deferred due date. Additionally, balances of unpaid 2019 taxes that would normally be due April 15, 2020, to avoid additional penalties and interest, can be deferred until July 15, 2020. Additional penalties and interest will not accrue during this 90-day period.
Taxpayers who make quarterly estimated tax payments, normally have their first payment due April 15, 2020. Under the deferred payment period established, the first payment will be considered timely if paid by July 15, 2020. However, all other quarters will remain on their normal schedule. Therefore, the second quarterly payment will still be due June 15, 2020, which is one month before the first quarterly payment is due.
North Carolina has adopted the same filing deadlines for individual income tax returns for 2019 as the IRS. The state will also allow individuals to postpone payment of taxes due to their 2019 tax return until July 15, 2020, without imposing any additional penalties. However, NC state law does not allow a waiver of any interest on amounts not paid. Currently, the North Carolina interest rate is 5% annually.
Other states have varying degrees of conformity with the Internal Revenue Service’s deferred due date and payment schedule. Other states have also allowed taxpayers additional time to file and pay other types of taxes, such as sales tax and payroll taxes.
BUSINESS INCOME TAX RETURNS
Internal Revenue Service
Returns for partnerships and S-corporations with a December 31, 2019 year-end were due for federal income tax purposes on March 16, 2020. If your business return was not complete as of that date and we were aware we would be completing your 2019 return, our firm prepared a federal extension for your business. Partnerships and S-corporations do not pay federal income taxes, so there would not have been anything due with the extension. C-corporation returns with a year-end of December 31, 2019, have a filing and payment due date of April 15, 2020. These returns would fall under the automatic deferred due date and payment deadline of July 15, 2020.
North Carolina business returns (partnership, S-corporation and C-corporation) are due April 15, 2020, for the year ended December 31, 2019. These returns fall under the deferred due date of July 15, 2020. The payments that would be due with these returns are eligible to be deferred until July 15, 2020, without additional penalties, as well. This would include income taxes, franchise taxes, and license fees. However, any amount due would be subject to interest (at an annual rate of 5%) on the unpaid balance.
OTHER BUSINESS TAXES
Currently, the IRS and NC have not deferred any required trust fund type payments, such as payroll and sales taxes. However, the US government has passed legislation to help businesses with 500 or fewer employees cover the cost of paid sick leave for affected employees and paid leave for employees who are required to stay home to care for sick family members or children who do not have child care. The rules around implementing this legislation are not final and are expected to be released later this week or early next week. The legislation will allow employers to reduce federal tax payments (941 payments) for amounts up to eligible credit amounts. In the event 941 payments are less than the eligible credit amount, the regulations will allow taxpayers to request an accelerated payment from the IRS.
We will continue to update you on any information as we receive it. Please monitor our website for additional information as it becomes available.
David and Ladoska