The usual April dash to the income tax filing deadline won’t happen this year.
Amid the COVID-19 pandemic, the IRS and the state’s Revenue Department gave people until July to file 2019 tax forms and make payments.
Even with the extra time, tax preparers and state officials are urging filers to press ahead, so they can release their anticipated refund, plan for a summer payment or head off a state cash crunch.
“If you need extra time, you have it,” Revenue Commissioner Cynthia Bauerly said this week. “But if you are ready, we really encourage you to go ahead and to file and pay.”
But there won’t be interest or penalties assessed until after July 15.
As of Monday, more than half of the usual returns — 1.65 million of 2.9 million — had come in. That’s on pace with last year. More than 1.1 million refund checks had gone out, and about 94,000 payments were sent in.
That still leaves a decent chunk yet to arrive. And the delayed deadline could have ramifications for the state’s treasury, since April is usually a big month for tax collections. If everybody who could hold off did, Bauerly said $1.36 billion could get hung up.
Bauerly hopes that doesn't happen.
“One thing we can all do to do our share to fight this virus is to make sure the state has the resources that we need to continue to care for people to push out money to our hospital systems and our health care providers,” she said.
Tax preparers are also advising clients not to wait too long to get everything done.
Along a main drag of Northfield’s brick-lined downtown, the accounting office between Tandem Bagels and the Goodbye Blue Monday Coffee House is typically a busy place this time of year.
Certified public accountant Ann Etter of Goodney and Associates said tax time means crunch time for her team.
“We are usually face-to-face. We have a lot of people in and out of the office all the time,” Etter said. “That’s been one of the hardest things for us to handle.”
Like much of society, tax preparation duties are being done from a distance to reduce the chances of spreading COVID-19. Clients are dropping their documents off curbside or uploading them to a secure site.
“Now it’s phone appointments or emails. I spend a good chunk of my morning responding to emailed questions from clients,” Etter said.
Stillwater accountant Elizabeth Bystrom says her client base is reacting to the income tax deadline shift in different ways.
“Some are still working like there’s an April 15th deadline,” she said. “Some are not.”
She’s made clear that she’s not slowing down even if all of the transactions are happening virtually.
“My policy has continued to be that I’m going to continue to file as many returns as possible as fast as possible,” Bystrom said.
Etter said filing sooner rather than later is important if people have money coming back to them. But the advice applies if they face a likely bill as well.
“You don’t have to wait,” Etter said. “And if you’re afraid of owing, it’s better to know now what you might owe now what you might owe in July than to wait until the last minute.”
The extension isn’t universal.
People who make estimated tax payments on a quarterly basis still face an April 15 deadline for their first state installment. For example, that’s taxpayers who are self-employed, rental property owners, investors or operators of some small businesses.
The IRS has relaxed the April deadline, but Bauerly said Minnesota decided not to follow suit.
If those taxpayers are experiencing hardship, Bauerly said her agency stands ready to work through it.
“We do want folks to know there is an opportunity to request an abatement to the penalty and interest if they cannot file due to reasonable cause,” she said.
Another note: the first half of property taxes paid through counties are still due on May 15. Those payments make up a big share of county and municipal budgets, leaving them less room to back off their deadline as they provide essential services tied to the COVID-19 epidemic.
For people contemplating whether to file a tax form earlier than the new deadline, Bauerly said there is no rule against staggering the transactions — filing a form now and paying later. And if taxpayers expect to have trouble coming up with the money in July, she said alternate payment plans are an option.
“Our collection division is ready to work with customers as needed to help them find ways to alleviate the financial hardship that can come at a time like this with the economy and the virus,” she said.