July 15, 2020 – NOT April 15, 2020
As of today, March 20, 2020, Steve Mnuchin tweeted 2019 IRS tax extension would be extended to July 15, 2020, 3 months past the traditional April 15th deadline. The purpose of this has been to help alleviate the severity of what has been an unprecedented economic impact due to the Covid-19 pandemic that has caused on the United States economy. What does that actually mean and what steps you should consider are as follows:
Tax Deadlines, Filing Penalties and Interest Charges
- Individual taxpayers and businesses will have until July 15th to file without any penalties, their 2019 tax returns.
- If you are an individual and payments need to be made for your 2019 tax liability, you will not face penalties or interest according to Mnuchin, if it’s paid by July 15th only for balances of up to $1 million.
- A corporation who needs to make payments for its 2019 tax liability, will not face penalties or interest according to Mnuchin, if it’s paid by July 15th for balances of up to $10 million.
- If for some reason an individual or a business is still unable to file by the July 15th deadline, it’s vital you still file Form 4868 for your personal or Form 7004 for your business return. The July 15th extension is an automatic, but July 16th will start the clock on interest and penalties for returns accepted afterwards.
- Due to economic hardship if you’re aware it’s going to be unlikely you can afford to pay your 2019 tax liability, consider the process of a IRS Installment Agreement instead of waiting until you go into collections. Being proactive will not only help safeguard your economic survival, but also your peace of mind.
SBA Disaster Assistance Loans
The Economic Injury Disaster Loans offer up to $2 million in assistance to small business, as a result of the COVID-19, upon a request received from a state’s or territory’s governor. This includes small businesses and private, nonprofit organizations in designated areas of a state or territory to help alleviate economic injury caused by COVID-19. Once a declaration is made for designated areas within a state, the information on the application process will be made available. These loans may be used to pay fixed debts, payroll, accounts payable and other bills that can’t be paid because of the disaster’s impact. The interest rate is 3.75% for small businesses without credit available elsewhere; businesses with credit available elsewhere are not eligible. The interest rate for non-profits is 2.75%. These loans will be available with terms of up to a maximum of 30 years, determined on a case-by-case basis, based upon each borrower’s ability to repay.
Nothing in life is ever free and there are going to be hoops that you need to jump through. In the end there’s going to be qualifiers that everyone is going to need to be addressed, and whether it’s being able to file your tax returns late, or consider a SBA loan, it doesn’t mean a free pass not to have adequate financials that you can defend. Again, the challenge is that if you feel you can bypass performing your due diligence, it can potentially cause you more harm than good.
Dwayne J. Briscoe