IRS extends tax deadline to July 15: Mnuchin

Treasury Secretary Steve Mnuchin announced the IRS will extend its tax filing deadline to July 15, as the coronavirus outbreak intensifies. National Taxpayers Union Senior Fellow Mattie Duppler joins Yahoo Finance's Zack Guzman to discuss.

Video Transcript

ZACK GUZMAN: Meantime, we've got an update out of Washington, DC, today that tax day will be postponed from the usual April 15 to July 15, according to Secretary of the Treasury Steve Mnuchin, giving people much-needed time to potentially square things away in a period with a lot of volatility out there.

And I want to bring in Mattie Duppler. She's the National Taxpayers Union Senior Fellow. She joins us now via Google Hangout. Mattie, first off, just what do you think this delay might do for Americans who are struggling right now as we're seeing more and more layoffs as well as businesses struggling to figure out how they're going to weather the current volatility?

MATTIE DUPPLER: Right. Well, Zack, as you guys have been talking about, I'm sure, ad nauseum over the past couple days, the word of the day is liquidity, right, making sure that businesses and households can stay as liquid as possible as they try to weather this volatile time.

At NTU, we had been talking about delaying tax filing for quite some time. We thought that was a common-sense approach that took very little energy from the federal government.

There was some confusion this week, though, whether or not that was going to happen. Treasury had announced they had delayed the deadline for tax payments but hadn't delayed tax filing. So as you and I both know, the real rub of tax filing is getting that work done. It's either filing for that extension or getting your return done. So that created a lot of angst, I think, for taxpayers. They were questioning whether or not they were going to get relief in these uncertain times. The fact that Treasury now has announced that tax filing as well as any payments are owed are delayed for 90 days is a great first step. I think they could go a lot further.

We are calling for them to go even further by delaying six months those tax-filing deadlines, not just that April 15 deadline. Individuals, of course, pay their taxes once a year, but businesses generally pay their taxes quarterly, and we think Q1 and Q2 need to be delayed in order to give taxpayers that relief that they really need during these uncertain times.

ZACK GUZMAN: Yeah, and that's kind of the difference between dealing with American taxpayers, the usual individuals, and businesses as well because we heard President Trump talking a lot earlier about potentially suspending payroll taxes through the full year. That was really what he was pushing for, but it seems like things have shifted a little bit to stimulus checks. And we're hearing now that potentially $1,200, if you believe the plan from Senate Majority Leader Mitch McConnell, right now seems like the number that would be sent out. Treasury Secretary Steve Mnuchin says that might not be enough, though. He might want to see that number come up. We'll see what happens.

But what do you make of that plan potentially to send that much money to individuals? Is it not enough? How does it kind of change things compared to the payroll-tax plan?

MATTIE DUPPLER: Right. Negotiations are ongoing. The administration had initially said they want two tranches of checks going out the-- out the door. The Senate bill only includes one. The Senate bill does include an extension on that payroll tax on the employer side, though, as well, which I think is smart policy. That, again, increases cash flow for businesses right now. The most important thing that Congress can do is try to provide support for businesses to retain their payrolls as we've seen unemployment claims skyrocketing in the past week.

This was one of the bright spots of the economy heading into the challenges with this virus was the employment picture. Jay Powell said this when he announced the emergency Fed cut-- rate cut two weeks ago on-- two weeks? One week ago? Time's a flat circle now. On that Sunday rate cut, he had said that the employment picture is robust.

What policymakers need to do now is try to use that strength in the economy to try and weather a lot of these uncertainties. If we can give businesses support so they can retain those payrolls, that will diminish some of the direct impact to households and hopefully give us a little bit more space when the virus threat is over for the economy to recover. So I do think that relenting on the payroll tax for the remainder of the year for the employer side is very smart.

Getting checks out the door is helpful, but it's not the whole picture, right? I mean, you had your previous guest talk about the typical average American makes about $1,000 a week. So if you're getting $1,000 from the federal government, that's only covering a week of your paycheck. That's not going to be enough to cover mortgages and other debts that households have. We need a more expansive plan.

I think the Senate bill gets us part of the way there. A little more support for those employers and for businesses and individuals I think would be necessary as well.

BRIAN CHEUNG: Hey, Mattie. It's Brian Cheung here. Great to see you again. I want to--

MATTIE DUPPLER: Hey, Brian.

BRIAN CHEUNG: --ask you about the ramifications on the state and locality side for funding. We were talking about this earlier with regards to what the Fed's been trying to do with its money-market liquidity fund and actually taking on a little bit of muni debt, at least in the short term. What are the consequences going to be for some states and for some localities if they're not getting packs-- or they're not getting tax payments until July maybe?

MATTIE DUPPLER: Yeah, so this is the other side of that coin. Even if the federal government delays tax payments, you still have state taxes to file. So some states are doing-- are following the lead of the IRS and delaying their tax deadlines, but not all states have. So this is going to create a lot of uncertainty for people who have interstate commerce concerns.

But, of course, for just the average taxpayer too, right-- like, how much are taxpayers paying attention to different announcements from the IRS and their state boards? I'm not sure that taxpayers really are paying close attention to that. So it's going to be crucial for officials at the state level to really communicate clearly with taxpayers.

I think it's a good idea for all tax-- all state tax jurisdictions to suspend income-tax liabilities for the same amount of time that the IRS does to provide clarity for taxpayers, particularly at this time when they're trying to gain as much cash flow in their households.

ZACK GUZMAN: All right, well, we'll see how these plans develop. No doubt we're getting updates on the daily. We'll see what changes. But for now, Mattie Duppler, thank you so much for joining us. Appreciate it. Thanks, guys.