Trump administration announces 90-day delay for many tax payments

The Trump administration says individuals and businesses will be allowed to delay paying their 2019 tax bills for 90 days past the usual April 15 deadline. The extension announced Tuesday to inject about $300 billion into the economy at a time when the coronavirus appears on the verge of causing a recession.

Treasury Secretary Steven Mnuchin said individuals would be able to delay paying up to $1 million in payments. Corporations will be able to defer payments on up to $10 million.

Taxpayers will still be required to file their tax returns by the April 15 deadline, but they will not have to pay their tax bill for 90 additional days. During that period, individuals and corporations will not be subject to interest or penalty payments.

“All you have to do is file your taxes,” Mnuchin said.

The Treasury secretary stated that President Trump had approved the final details of the program, including its expansion to include the potential of allowing taxpayers to keep $400 billion in the economy for now. Last week, Mnuchin had estimated that deferred payments would amount to $200 billion.

Mnuchin mentioned that the delay would apply to all, but the “super-rich” but did not talk about the payment delay would work. The IRS has not released specific guidelines for the program.

The IRS is using authority under Trump’s national emergency declaration to take the step of approving the 90-day payment delay. Mnuchin encouraged taxpayers to keep filing their returns because many of them will receive refunds that they will be able to use to pay bills during the economic downturn.

As of February 21, the IRS has issued more than 37.4 million refunds averaging at $3,125.

Mark Zandi, the chief economist at Moody’s Analytics, stated that the tax delay was only a stop-gap program but that it should help cushion the economy during a period of severe stress.

 

“Individuals and small businesses need cash right now,” Zandi said. “Anything that delays them having to send a check to the IRS will allow them to pay for their groceries and make mortgage payments and pay other bills.”

 

Under routine filing procedures, taxpayers must pay their obligations by April 15, even though they can get a six-month extension to file the full return.

Mnuchin spoke to reporters at the White House and said that as part of a stimulus plan negotiated with Congress, the administration is considering ways to send checks to Americans to help alleviate the impact of job losses from layoffs at restaurants and the tourism industry.

“Americans need cash now, and the president wants to give cash now and I mean now in the next two weeks,” Mnuchin said.