The vast majority of Americans are getting 90 extra days to pay their federal income taxes.
Treasury Secretary Steve Mnuchin announced the policy change in a White House briefing earlier today. The IRS will waive interest and penalty fees for those who owe up to $1 million for 90 days after April 15, effectively moving the dude date for paying what you owe the IRS back three months.
It’s an unprecedented move from the Treasury Department mant to provide relief to taxpayers facing the economic cataclysm that is the COVID-19 pandemic. It’s supposed to help those feeling those effects by keeping the money owed in income tax — potentially hundreds of billions — in the hands of consumers.
Importantly, everyone still has to file their taxes by April 14, but they’ll have until July 14 to pay back anything they owe.
This federal delay comes after numerous states instituted similar policies. Maryland extended the deadline for certain business-related tax filings to June 1. California pushed back its state income tax deadline by 60 days. Washington and Oregon have issued guidance to taxpayers who might qualify for specific waivers and extensions.
This is good news for those feeling the fiscal strain of the pandemic, be it from lost wages, lost business income, or medical bills associated with COVID-19. But make no mistake: the scope of the damage means that this delay is far from a comprehensive way to address the economic wreckage this pandemic is leaving in its wake.
For one thing, 68 million returns have already been submitted through March 6, and none of those people will be able to take advantage of the extension, though it is the case that many people who file early expect refunds and those who wait expect to owe money. In other words, Americans who have yet to file their taxes are more likely to owe money and therefore benefit from this unprecedented delay.
Still, it seems likely that some combination of payroll tax cuts, direct financial assistance, and industry bailouts will follow this move, as no one thinks that it will be enough to fully address what’s happening. Time will tell what those moves will be and how much good they will do.