On Thursday, Rep. Lloyd Smucker, R.-Pa., announced he will introduce a bill that would postpone the due date for first-quarter 2021 estimated tax payments from April 15, 2021, to May 17, 2021. The estimated tax due date would then match the due date for 2020 Forms 1040, U.S. Individual Income Tax Return, which the IRS moved to May 17 in Notice 2021-21.
When the IRS postponed the April 15 deadline for forms in the Form 1040 series, it explicitly stated that the change did not apply to estimated tax payments. The failure to include estimated payments in the deadline postponement nullified the benefit of the postponement for millions of Americans. Often, the prior-year tax return work has to be done to calculate the current-year estimated payments, the AICPA noted in a statement released March 17, the day the IRS first announced the postponement.
Pandemic-related loss of revenue and other hardships have made it difficult for small businesses to forecast 2021 revenue and properly estimate their 2021 tax liability. Practitioners have also questioned how the IRS will handle overpayments of 2020 taxes that are designated to be applied to 2021 taxes if the overpayment is made on a Form 1040 that is timely filed or extended after April 15.
Momentum for a postponement of the estimated tax due date has been growing. On March 24, the AICPA and National Association of Enrolled Agents wrote to Treasury and the IRS requesting broader relief, including postponement of the first-quarter estimated tax deadline. On March 31, a bipartisan group of 60 members of Congress, including Smucker, urged the IRS to extend the deadline to May 17.
In a letter dated April 8, Christopher W. Hesse, CPA, chair of the AICPA Tax Executive Committee, thanked Smucker for his efforts to postpone the estimated tax deadline and expressed the AICPA’s support for the bill.
— Alistair M. Nevius, J.D., (Alistair.Nevius@aicpa-cima.com) is the JofA’s editor-in-chief, tax.