Posts Tagged ‘2020.Tax.Season’

California’s Franchise Tax Board Extends Deadlines

Saturday, March 14th, 2020

Yesterday, California’s Franchise Tax Board, the state’s income tax agency, extended the deadlines for taxpayers to both file and pay 2019 California income taxes (and 2020 California estimated taxes) by 60 days. Here is the announcement in full:

Sacramento — The Franchise Tax Board (FTB) today announced special tax relief for California taxpayers affected by the COVID-19 pandemic. Affected taxpayers are granted an extension to file 2019 California tax returns and make certain payments until June 15, 2020, in line with Governor Newsom’s March 12 Executive Order.

“During this public health emergency, every Californian should be free to focus on their health and wellbeing,” said State Controller Betty T. Yee, who serves as chair of FTB. “Having extra time to file their taxes helps allows people to do this, as the experts work to control the spread of coronavirus.”

This relief includes moving the various tax filing and payment deadlines that occur on March 15, 2020, through June 15, 2020, to June 15, 2020. This includes: 

·       Partnerships and LLCs who are taxed as partnerships whose tax returns are due on March 15 now have a 90-day extension to file and pay by June 15.

·       Individual filers whose tax returns are due on April 15 now have a 60-day extension to file and pay by June 15.

·       Quarterly estimated tax payments due on April 15 now have a 60-day extension to pay by June 15.

The FTB’s June 15 extended due date may be pushed back even further if the Internal Revenue Service grants a longer relief period.

Taxpayers claiming the special COVID-19 relief should write the name of the state of emergency (for example, COVID-19) in black ink at the top of the tax return to alert FTB of the special extension period. If taxpayers are e-filing, they should follow the software instructions to enter disaster information.

The FTB will also waive interest and any late filing or late payment penalties that would otherwise apply.  

I expect we will see a similar announcement from the IRS next week. It appears (at least for now) that the March 16th deadline for filing federal S-Corp and partnership returns will hold.

Kudos to the FTB for being proactive during this crisis.

Will the April 15th Deadline be Extended?

Wednesday, March 11th, 2020

The Wall Street Journal has a story (pay link) this morning speculating that the Department of the Treasury will push back the April 15th deadline.  There are no specifics given in the story, but given that politicians on both sides of the aisle are talking about this, there’s a reasonable chance this will happen.

The reason, of course, is the current coronavirus (Covid-19) outbreak.  As the outbreak worsens (which, it appears, it will), there will be disruptions.  Consider tax professionals in Seattle, where a large number of individuals have fallen ill.  Do you want to meet with someone right now, especially given asymptomatic individuals can spread the disease?  And for those who are ill (or are treating family members, or who have to deal witch their children who are now home on an extended ‘break’) they have more important things to deal with.

It’s something I, as a business owner, have to deal with.  We wash our hands after seeing someone, but let’s face reality: we operate in close quarters.  If one of us gets this, it’s likely that all of us in the office would get this.  As for working at home, that’s near impossible for our office given the technology infrastructure we use.

I had initially thought we would see a larger number of extensions (and it’s something I think still could happen).  I now suspect we will see this extension–probably something similar to the automatic two-month extension given to individuals outside the United States on April 15th.  Whether it will include a waiving of interest is to be determined.

I’ll close with something that’s obvious.  This week long-time clients called me and said they had colds, and wished to postpone their appointment.  We fit them in in two weeks.  If you’re sick, use some common sense (be it a cold, the flu, or anything else): Don’t take actions that will infect others!  We have a rule in our office that if you have a fever, you go home, and you cannot come into work until 24 hours after the fever has broke.  If all of us use some common sense and good hygiene, we will likely whether this storm with minimal damage.

“[D]id you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”

Wednesday, October 23rd, 2019

I haven’t posted that much this year for a few reasons. I’ve had some family issues (and that takes priority over just about everything), and this was a difficult tax season. Now that Tax Season is over, I’m going to be increasing my posting. The next few posts are all going to be looking at cryptocurrency (what the IRS calls “virtual currency”) because there’s been a lot of activity in this area over the past few weeks.

Today, we’re looking at an upcoming issue. During the second half of each year, the IRS releases draft tax forms for the following tax season. The IRS gets industry comments, and it also alerts both software makers and tax professionals of upcoming items. Here’s the top of the draft Schedule 1 for 2019:

CryptoQuestion

The question reads, in full, “At any time during 2019, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?”

The IRS thinks that some taxpayers just might not be telling the truth about cryptocurrency. This question means that if you own any cryptocurrency and had any transactions in 2019, you need to check a box. It’s similar to the boxes on the bottom of Schedule B asking about foreign financial accounts.

Tax returns are filed under penalty of perjury. Thus, a taxpayer who answers that question “No” when he or she is trading virtual currency would be committing perjury. Indeed, it’s yet another way the IRS is looking into cryptocurrency transactions.

Kelly Erb, who alerted me to this new question, believes the location of the question is poor. I agree. An individual who sells cryptocurrency must complete Schedule D and Form 8949. That individual might not include Schedule 1 on his or her tax return. If you’re looking for improving compliance with the law, the question should be asked where impacted individuals will see it. The IRS will take comments for the next 17 days on the draft form, and I have suggested to the IRS that the question be put on Schedule D rather than Schedule 1. (If you want to comment, you can send an email to WI.1040.Comments@IRS.gov. Note that the IRS does not respond to each comment, but absolutely does look at the comments and considers them before making draft forms final.)

A client was in my office toward the end of September to finalize his 2018 returns. He had a lot of cryptocurrency transactions, but the overall gain or loss was about $100. As we attached a listing of his thousands of trades to his tax return, he asked if I thought someone would be prosecuted over cryptocurrency. I strongly believe that IRS criminal investigation will look at making an example of someone. There’s likely a kid in Dubuque or Dallas or Denver who made $3 million in cryptocurrency and thinks it’s “free money.” It’s not–accessions to wealth are, by definition, income and all income not exempted by Congress is subject to income tax. As always, it’s a whole lot easier to simply pay your tax than not do so.