Time’s finally up: Preparers discuss how July 15 went

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The long wait for the end of the long postponement is over. How did this July 15 compare with regular Tax Day?

“‘It was the best of times, it was the worst of times’ applies,” said

Joseph McCaffrey, a CPA and partner of operations at Morris + D’Angelo CPAs, in San Jose, California. “Extending the filing deadline three months provided a huge benefit: more time for people to gather their data and file without feeling rushed. This resulted in more returns and fewer extensions.”

Gail Rosen, a CPA in Martinsville, New Jersey, was surprised that this July 15 was worse for her office than previous April 15 deadlines. “More of our clients waited for the last minute than ever before,” she added. “I believe that many were in denial about a true deadline due to the coronavirus.”

“While we weren’t able to take vacations and have a relaxed end of April or early May, the workload was not nearly as compressed as the normal season,” said Rob Seltzer, a CPA at Seltzer Business Management in Los Angeles.

“Worse than prior years,” said Twila Midwood, an Enrolled Agent with Advanced Tax Centre, in Rockledge, Florida. “I had more last-minute extension requests than I normally have on a traditional 15th. Trying to prepare those requests while calculating extensions with payments or finishing returns that had to go out the door was overwhelming this year.”

But for some, times were definitely better. “Although it was a longer slog from January to July 15, I experienced better outcomes and metrics with the extended deadline than I have in past years with the April 15 deadline,” said Phyllis Jo Kubey, an EA in New York. “I had fewer returns to extend beyond the filing deadline. I also had better and more complete information with which to project 2020 tax liabilities/calculate estimated payments.”

R & R

“Every tax professional I know shares the same view: What a bizarre season,” said Larry Pon, a CPA at Pon & Associates in Redwood City, California.

Preparers previously reported that the extra time filled with extra work as clients seemed confused over deadlines, extra benefits (including for unemployment) and other details of pandemic relief.

“A great deal of confusion for taxpayers, the government and preparers,” added California’s McCaffrey. “Increasing the season without a break has caused preparers to feel more burned out than with an April 15 deadline. There are now only three months, rather than the usual six, to file all remaining income tax returns. The PPP program was poorly thought-out and hastily implemented, with many changes made to the rules even after loans were made. What was initially seen as a critical business lifeline has morphed into a bureaucratic mediocrity.”

Manasa Nadig, an EA and owner at MN Tax and Business Services and a partner at Harris Nadig in Canton, Michigan, was able to file almost 80 percent of her client list by the original due date of April 15. “The buffer, so to speak, of the extra time for my firm was mostly those clients who owed money and wanted to wait to pay at the last minute,” she said. Nadig’s firm also picked up a lot of new clients this year, “those transitioning from firms that hadn’t adapted to paperless transactions,” she said.

“Many people waited until June to get their tax stuff in,” said Brian Stoner, a CPA in Burbank, California. “Also, I have 50-plus business clients and most of them were constantly asking about PPP loan calculations and forgiveness, plus EIDL questions, unemployment questions and constant help on the stimulus payments. I get tired just thinking about it.”

Wrinkles of a pandemic

Bill Nemeth, president and education chair of the Georgia Association of Enrolled Agents. had one elderly client insist on meeting in person (with masks) on July 14 just to hear in person that he owed $12,000.

“He knew the situation from email but wanted to review it in person. He paid the balance online later that day,” Nemeth said. “This preserved his current monthly installment agreement and allows me to request a first-time penalty abatement. And yes, he paid a premium for an in-person meeting.”

“Economic stimulus checks were a major drain. Folks called and called regarding why they hadn’t received their money – and still are calling,” said EA Terri Ryman of Southwest Tax & Accounting in Elkhart, Kansas. “Then comes the PPP loans and the EIDL loans. And, of course, everything was an emergency. Having the IRS close down for three months didn’t help.”

“I did on July 15 the same thing I always do on April 15: I went to the post office to drop off extensions,” Pon said, adding that he especially encouraged e-payments this year. “I was discouraging checks because we have no idea when the checks will be cashed. Many clients have complained that checks they mailed back in March still have not cleared their bank accounts,” he said.

“This season we did really notice a lot more errors on returns that we reviewed despite that we share a lot of our clients’ tax information [with] each preparer and send them an email proactively that outlines the tax strategies we implemented in 2019,” said Bruce Primeau, a CPA at Summit Wealth Advocates, in Prior Lake, Minnesota.

“Not sure what it is really – perhaps that the tax law is changing so rapidly that it’s very difficult to keep track of where things stand each year,” he said. “Or perhaps it’s just that preparers are trying to get so many returns prepared so quickly, that simple mistakes are being made and not caught on review.”

Extra time for a ‘bad storm’

Time for some clients is water: It’ll fill any vessel you give it.

“Many simply were prepared, essentially filed or ready to file, and were awaiting the dreaded day to transfer their wealth to the public coffers. Essentially, there was no reason to prepay. For others, the day still crept up on them like a bad storm,” said Daniel Morris, a CPA and senior partner at the California firm Morris + D’Angelo.

“As if the deadline were still April 15, there were the usual procrastinators,” said Minnesota’s Primeau. “I was reviewing considerably fewer returns last week than I typically do.”

On April 15, Kansas’ Ryman had 335 returns logged in with 30 extensions. On July 15, Southwest had 359 returns logged in with 42 extensions. “Better or worse? Depends on how you look at it,” she said. “I personally didn’t like the extended return period. Three more months for folks to procrastinate — and they did. I still took a week off after April 15 and our hours dropped back to normal between April and July because no one can keep up the hours we usually run during tax season.”

“I had everyone on extension and received the normal number of calls from folks who sent me their info in the three days leading up to July 15,” Nemeth said. “Still have double the normal number of clients on extension and will find Oct. 15 an interesting time, as well.”

“For clients who traditionally had to extend because of missing K-1s, many of those … came in before July 15 and the taxpayers did not need an extension,” Kubey said. “For clients who had delivered materials to me, I had fewer than 15 extensions. For clients who had given me nothing yet, I had fewer than 30.”

One thing that created a bit more work and stress for clients was understanding what payments were scheduled for e-payment on July 15, Kubey said. In many cases, the July 15 payments were also huge: deferred 2019 federal and state balances, deferred first- and second-quarter 2020 estimated tax payments, IRA contributions. “I’m glad I took the extra time to make payment charts for my clients,” she said.

And next year?

Nadig thinks an extended season would be good every year. “That means the due date of returns should be changed to June 15 every year for individuals and May 15 for flow-throughs,” she said.

“I have half as many of the usual extensions [but I] expect to be busy for the rest of the year,” Pon said. “We still have October extensions, and new this year will be helping borrowers with the PPP loan forgiveness applications. Now we’ll [also] be dealing with a deluge of IRS notices.”

“I hope next year it’s back to April 15,” he said, “or you’ll see a record number of tax pro retirements.”

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