March 20 update: Treasury Secretary Mnuchin announced via Twitter on March 20 that the deadline to file returns has now been extended to July 15, along with the previous extension to pay. We continue to urge taxpayers who are anticipating refunds to work with their practitioners as they are able, to file as soon as possible. More information is expected, and we will update you as the details emerge.
March 18 update: Notice 2020-17, Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic, was released on March 18. The notice provides for an extension of time to pay federal income taxes originally due April 15, 2020 until July 15, 2020. The relief is only applicable to individual tax amounts up to $1,000,000, regardless of filing status or up to $10,000,000 for each consolidated group or for each C corporation that does not join in filing a consolidated return. No extension is provided in the notice for the payment or deposit of any other type of federal tax, or for the filing of any tax return or information return. The AICPA continues to work with Treasury for appropriate relief. Continue to check out the AICPA Coronavirus Resource Center for the latest updates and press releases.
The novel coronavirus (COVID-19) has been at the top of minds and dominated news coverage since it was first identified in Wuhan, China, in December 2019.
The coronavirus spread globally since its initial outbreak, and the World Health Organization (WHO) has officially declared it a global pandemic.
Check out this animated map to see its spread.
The coronavirus outbreak is causing noteworthy disturbances to many companies’ operations. Public accounting practices are no different. Fortunately, there are steps that you, as a practitioner, can take to best position your clients and practice to handle the challenges associated with the coronavirus or any unforeseen extraordinary event.
Prepare your clients.
Your clients might ask what they can do in the event they can’t file their tax returns on time.
The AICPA issued a March 10 press release calling for the Treasury Department and the Internal Revenue Service (IRS) to give all taxpayers an automatic extension until Oct. 15 without the need to file any forms or request the extension, along with waiving related fees. The AICPA also recommended an extension of the filing deadlines for businesses.
Considering the president’s declaration of a national emergency, invoking the Stafford Disaster Relief and Emergency Assistance Act, we’re anticipating the Treasury and the IRS will make an announcement this week. This could include an extension of the April 15 filing deadline by as much as 90 days and a waiver of penalties and interest for most taxpayers. Additionally, they’ve indicated they’ll be generous in determining reasonable cause abatement of penalties for taxpayers and tax preparers unable to file promptly.
While we wait for additional decisions from Washington, the extension of time to file is still a prime mechanism already available for taxpayers who need more time to complete their returns. We’ve developed some pointers on how to communicate extension filing with your clients. You can find them in our “Tax extension FAQs for clients” in the Tax Practitioner’s Marketing Toolkit.
While a filing extension doesn’t extend the time to pay, knowing that they have an additional six months to complete their returns will put your clients’ minds at ease. And, if worst comes to worst for some come April 15, there are options available for requesting abatement for failure-to-pay or failure-to-file penalties. Check out the AICPA’s IRS first-time penalty abatement guidance and IRS penalty abatement templates for details.
Bottom line? Plan with your clients. Don’t wait until the last minute to encourage clients who might need to extend their returns to file an extension.
Protect your practice.
Having your whole office out sick will slow practice productivity, failing in service to your clients.
To reduce community spread of the virus in your office, consider implementing remote working options for your employees. This will reduce the exposure and transmission of the coronavirus among coworkers.
You may see other benefits as well. Those working remotely will tell you that the reduction in their daily commutes alone provides them with reduced stressed and leads to a more efficient and productive work day. There are also fewer distractions than in a traditional work environment. Many remote workers even enjoy overall healthier lifestyles, as there is more time for periodic exercise and fresher eating options because workers can prepare meals themselves instead of buying lunch on the go.
And, with technologies such as Zoom, Skype and RingCentral, employees can stay just as connected virtually as they do in person. Here are some more tips on how to make remote working successful in your practice.
Don’t just focus on implementing virtual tools for workers. Establish portals for clients to upload tax documents or download copies of their completed returns and workpapers. This is an added benefit for clients who are unable or unwilling to venture out beyond their comfort zones. This is another way you can do your part to reduce community spread.
The key here is to be proactive and have contingency planning in place for your employees, clients and business. Check out some additional tips and considerations in planning for the coronavirus.
With all the uncertainly surrounding the coronavirus, it can be an uneasy time. Rest assured knowing that the AICPA is here to support members. Make sure to check out information about the coronavirus from reliable sources, such as the Centers for Disease Control and Prevention. And, check out the AICPA Coronavirus Resource Center, stacked with articles, podcasts, a State tax filing guidance for coronavirus chart and other resources to make sure you are up to date on the virus and its potential effects on your clients and practice.
Sarah Shannonhouse, CPA, Manager — Tax, Practice and Ethics, Association of International Certified Professional Accountants