March 26, 2020

State Responses to IRS Extended Due Date for 2019 Tax Returns

By John Bonk, National State & Local Tax Leader

State Responses to IRS Extended Due Date for 2019 Tax Returns State & Local Tax

While the IRS will allow taxpayers to delay the filing of certain 2019 corporate and individual income tax returns until July 15, 2020, the states have not all followed suit. As of March 25, we are still waiting for responses from at least 15 states. In the absence of guidance, the conservative approach would be to assume that the states’ due dates have not changed. The states that have responded, for the most part, have conformed to the federal extended due date, including the extended time to pay the related taxes without incurring interest or penalty. However, as it usually goes with states, the conformity is not uniform.

Idaho and Mississippi have extended their due dates for corporate and individual income tax returns, but not for the full amount of time that the Federal return was extended. Idaho has extended its returns until June 15, while Mississippi has extended its returns only until May 15. These slightly different dates could lead to interest and penalties for taxpayers if they erroneously assume that these states followed the federal guidance.

Minnesota, North Carolina and Virginia only offer penalty abatement by request. These states will not abate interest on taxes paid after April 15. This means that a taxpayer who follows the Federal July 15 deadline will be subject to three months of interest in these states.

States continue to issue rapid responses to the federal changes in filing and tax payment dates. In some cases, legislative action is required to change the dates or conform to federal changes. Since many of the state legislatures are closed or limited, due to COVID-19, not every state may release conformity guidance to the recent changes.

The state extensions generally apply to individual and corporate income tax returns, and they don’t always encompass other taxes such as sales tax, tangible property tax, or estimated payments. The states’ guidance in these areas has been scattered and not consistent with the usual manner in which states approach income taxes. The states still need taxpayer funds to operate and, therefore, they are not offering extensions for all taxes.

We will continue to follow these developments and will provide information on these issues as they are clarified. If you have any questions, please contact your Marcum tax professional or John Bonk, Director, Tax & Business Services, at 954.320.8112 or email John.

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