Time out: How the deadline postponement is affecting tax preparers

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The pandemic has officially pushed filing day for the federal government and a growing list of states into the summer. As it’s done to many other aspects of society, the outbreak has also upended the definition of “reprieve” for preparers.

Is it a real breather? And what are clients saying?

“Breather? Ha!” said John Dundon, an Enrolled Agent and president of Taxpayer Advocacy Services, in Englewood, Colorado. “We’re pulling hair out over here and can only imagine our time and attention in highest demand for the unforeseeable future. Everyone is so confused and there is so much disinformation floating around.”

“The official pushback of federal day came after so much drama!” said Manasa Nadig, an EA and owner at MN Tax and Business Services and a partner at Harris Nadig, in Canton, Michigan. “Between the time the government had tweeted out the news and the time the IRS confirmed it, I had been flooded with phone calls, text messages and emails.”

“Since I’ve been moving my office to home the last few days, it will help, but since I would have filed extensions for my clients anyway (and still plan on doing so to make sure Oct. 15 is still in play) plus will get done clients with tax liabilities first anyway, it won’t change my season significantly one way or the other,” said Brian Stoner, a CPA in Burbank, California.

“It is helping a little bit,” said Morris Armstrong, an EA and registered investment advisor at Armstrong Financial Strategies in Cheshire, Connecticut. “Frankly, the delay of the payment date may be more beneficial than the actual delay of filing date.”

“The postponement may have helped regarding completing everything by April 15,” said Twila Midwood, an EA at Advanced Tax Centre, in Rockledge, Florida, “but extra time has now resulted [in] fielding phone calls and emails, sending client newsletters regarding the postponement of tax payments followed by yet another newsletter regarding postponement of the filing date and working with those who had or have a balance due to accommodate for the July 15 date. All of this at non-billable time!”

Sheltering in place

Tax preparers are both affected and not affected by the isolation orders spreading nationwide. CPA Larry Pon in Redwood City, California, has been sheltering in place for several days, though of course prep is considered an essential business.

“We’re in the same category as marijuana dispensaries,” Pon said. “Good to know I am in an essential business. Accordingly, I’m sheltered in place here in my office. My business is not set up to work from home — I intentionally did that to separate work from home.”

Pon has switched face-to-face appointments to the phone. “We’re telling clients to send their information to us,” he said, adding that they can drop material personally but without contact, use a shipping service, email or fax or upload to secure sites. “I use FileShare and Verifyle. I’m not comfortable with Dropbox or Google Docs since I get a lot of phishing emails from them. If I need to share my computer screen, I use Zoom.”

“With most taxpayers quarantined or under self-quarantine this last week, many complicated clients have found themselves also working on their tax stuff, a.k.a. calling [us] with questions,” said Dundon in Colorado. “Being bombarded with complicated tax questions while in the mindset of efficient, mistake-free processing for our most favored early birds has been extraordinarily challenging.”

At the time of his response, the home state of EA Joel Grandon in Marion, Iowa, reported fewer than 70 cases of coronavirus. But “with multiple states issuing a self-quarantine order and many others rumored to be doing so, my clients are anxious to get their returns picked up,” he said. “Many of my clients are appreciative of the extended payment date and our snowbird clients are thankful with the extended filing date that they can wait until they come home in May to bring their documents to me. Many of them are nervous about mailing them when they are gone, and that demographic doesn’t exactly embrace the technology of portals.”

“A few [clients] have expressed relief in knowing that they don’t have to rush to get their tax information to their preparer. Most have already gotten their info in and are expecting their 2019 returns to be prepared by April 15,” said Bruce Primeau, a CPA at Summit Wealth Advocates, in Prior Lake, Minnesota. “It presents an opportunity for our clients who have balances due to hold onto their money for a bit longer to earn more interest income. That said, we always encourage clients to get their tax information to their preparer as soon as possible. It gets pretty frustrating when clients wait to deliver their information until just before the filing deadline and then expect a very quick turnaround.”

“Clients are happy,” Midwood added. “Those who [always] try to wait until the last minute will still wait until the last minute.”

“The most difficult part for me as an employer may be helping my administrative staff see the urgency of completing the season as close to April 15 as possible,” Grandon added.

When and if

“The IRS was not clear as to when the 4868 due date was,” said Bill Nemeth, president and education chair of the Georgia Association of Enrolled Agents, who added that his software provider has found out that the last day to file a 4868 extension is July 15 to extend the due date to Oct. 15. Filing a federal 4868 also automatically extends his state’s deadline to Oct. 15, Nemeth added.

“I’m filing 4868 in all required cases by April 15 because I don’t want to spend hours on the phone with the IRS down the road when they tell me their interpretation of these rules,” he said.

Other preparers have wondered when and if postponements are coming on other federal returns, such as the 8938, 3520, 3520A, 5471, 8865 and 8858. Questions also remain on quarterly estimated payments.

Advice on how clients can use the extra time varies. Pon, for instance, is letting clients choose. “One client wants to put off his payment to July 15 and invest the money in a U.S. Treasury fund,” he said. “I certainly do not recommend using this money to play this crazy stock market.”

And the preparers themselves? “I’m personally still paying my taxes on April 15 and June 15, since I may forget by July,” Pon said. “I’m expecting to see the number of cases going up before it goes down. I’m also looking forward to tuning on the news and this story not being the first story.”

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