As the coronavirus escalates across the United States, businesses and individuals are concerned with how this will affect their taxes, despite the deadline being extended to July 15.
That changed deadline is not a blanket extension for all taxes, tax litigation consultant and author of “Small Business Tax Guide” Daniel Pilla told Yahoo Finance’s On the Move on Thursday. It only applies to income taxes and not employment taxes businesses have to pay, he pointed out.
“The problem with this ... is the extension that the IRS granted last week, from April 15 to July 15, applies to income taxes only. Alright? This is very important for people to understand, that we’re only talking about an income tax filing and an income tax extension. It does not apply to employment taxes,” he said.
That means that small businesses still have to file their 941 forms, which employers use to report taxes withheld from workers’ paychecks and to pay their portion of Social Security or Medicare. Employers still have to file employment tax returns on time and make employment tax deposits on time, according to Pilla.
Of course, he added, this raises the question of what happens when employers can’t make those filings on time.
Asked if the IRS was likely to go after small businesses for not paying taxes, Pilla said, “I just received a news bulletin from the Internal Revenue Service from yesterday afternoon, it’s not even on their website yet, that says they’re going to back off on enforcement between now and July 15.”
Moreover, Pilla said, if individuals and businesses can’t file their income taxes by July 15, they also have the option to file for yet another six-month extension. “That’s automatic. You don’t need a reason for that,” he said.
Still, the IRS encouraged all taxpayers who believe they’re owed a refund to file as soon as possible — even though the deadline has been extended.
McKenzie DeGroot is a producer at Yahoo Finance. Follow her on Twitter: @degrootmckenzie