Is it the luck of the Irish? Or just deja vu all over again? Either way, the federal government chose St. Patrick’s Day to let it slip that April 15 won’t be the tax filing deadline in 2021 after all.
Multiple published reports said Wednesday that the Internal Revenue Service has chosen May 17 as the deadline for 2020 tax returns. And while the revenuer itself hasn’t made it official, the word leaked out from, among others, U.S. Rep. Bill Pascrell (D-NJ), chairman of the House Ways and Means Subcommittee on Oversight.
Pascrell said in a statement: “Under titanic stress and strain, American taxpayers and tax preparers must have more time to file tax returns. And the IRS itself started the filing season late, continues to be behind schedule, and now must implement changes from the American Rescue Plan.”
Pascrell’s committee set a hearing for Thursday afternoon on the tax filing season, with testimony expected from IRS Commissioner Charles Rettig. It seems reasonable to expect the delay to be announced by that time or shortly after.
Last year’s delay included quarterly individual and quarterly estimated tax payments, too. No word on those this time, but that may be addressed when the IRS makes its expected announcement.
The Millionacres bottom line
Last year, the IRS announced on March 21 that it was delaying Tax Day 2020 -- for 2019 returns -- until July 15. Will it be pushed out as far this year for 2020 returns? Only time will tell.
Much of the reasons are the same, including stimulus checks, new tax exemptions, the need for updated forms, and other turmoil caused by the pandemic and the reaction to it in the form of the CARES Act last year and this year’s American Rescue Plan.
How the filing grace period will affect real estate investors is a very individual matter. Landlords who lost money because of their tenants’ inability to pay -- including those tenants covered by eviction moratoriums -- will have more time to figure out how to account, along with their accountants, for those losses.
That’s just one example. There also has been final guidance issued in recent months in such complicated matters as like-kind 1031 exchanges to contend with this time, just as last year’s tax season included the first time final guidance was available for the Opportunity Zone Program. For that matter, those rules were just updated in January.
Plus, this deadline extension will give investors in such things as real estate investment trusts (REITs) public and private to get their affairs in order before coming clean with the man. Lots of capital gains are out there -- and losses, too, of course -- and this extra month could be used to do some strategizing.
“The filing extension gives taxpayers additional breathing room to meet their tax obligations in what is becoming one of the most complicated tax seasons in decades,” Bloomberg says in its report.
Pandemics will do that. Let’s hope next year’s tax season finds the nation and its taxpayers facing far less crisis and challenge. In the meantime, here's our guide to real estate taxes.