Juggling IRS payment deadlines

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First, the payment deadline for individual tax returns was extended from April 15, 2020 to July 15, 2020, first announced at a news conference by the Secretary of the Treasury. The first quarter estimated tax payment was also extended to July 15, with the second quarter payment unchanged, for now. Then it was announced that the extension would apply to the filing date as well as the payment date. And on March 27, 2020, the IRS issued Notice 2020-20, to include Form 709 (gift and generation-skipping transfer tax) in the deadline extension.

Many taxpayers — and their preparers — are understandably confused, according to Dina Pyron, a partner at Big Four firm EY and global leader of EY TaxChat.

“The IRS has updated their e-filing technology so that taxpayers can have their payments scheduled to be withdrawn on July 15,” Pyron said. “And while taxpayers can now postpone their 2019 filing and payments until then, many of our clients are asking what happens if they already e-filed and indicated a direct debit payment on April 15.”

The good news is that taxpayers are now able to defer the payment if they already e-filed, according to Pyron. “However, payments will not automatically be delayed,” she said. “They will need to be cancelled and rescheduled using the same system that was originally used to schedule the digital payment.”

"If a taxpayer used any of the government-hosted methods of scheduling automated payments, they must change that date at least two business days before the payment date,” she advised. “If the date scheduled was April 15, we suggest making the change by Friday, April 10.”

Depending on the payment method used, Pyron offered the following advice on canceling and rescheduling payment:

  • For people who scheduled a payment through IRS Direct Pay, refer to the confirmation number on the email notification of the scheduled payment to access the “Look Up a Payment” feature
  • If the taxpayer scheduled a payment through Electronic Federal Tax Payment System, click on Payments from the EFTPS homepage, log in, then click “Cancel a Tax Payment” from the left menu and follow the instructions
  • If an electronic funds withdrawal was authorized as part of filing the tax return, the payment may be cancelled by contacting the U.S. Treasury Financial Agent at (888) 353-4537.

“If a taxpayer scheduled a payment by credit or debit card, they should contact the card processor to cancel the card payment,” Pyron said. “Although each company will require different timing, we still recommend requesting the cancellation by Friday, April 10, to make sure the change goes through.”

“These payment delays can bring relief during this time of uncertainty, but remember to schedule payment in time for the new deadline. Not all payment systems, including credit card companies, will set up a new direct debit at a future date,” she cautioned. “If an automated payment cannot be scheduled, the IRS will need to be paid directly by mailing a check or arranging a wire with a bank to arrive on July 15.”

For once, procrastinators will be rewarded for their delay, Pyron observed.

“If a taxpayer hasn’t filed yet, they can just e-file and do an automatic withdrawal on July 15 without the extra work of cancelling and rescheduling,” she said.

“The extension of the federal due dates are now fairly straightforward, but questions remain with the states,” she said. “Some have changed their due dates to be in alignment with the federal due date, but not all of them have yet. The practitioner should confirm the date through the AICPA and the IRS Newsroom.”

“Practitioners may have to do an extension and determine the payment due date of the state — whether they’re sticking with the April 15 deadline. And the estimated tax payment for the first quarter is due July 15, while the payment for the second quarter is due June 15,” she said. “But we have heard rumblings that the second quarter payment deadline might be extended as well.”

So stay tuned.

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