NJBIA and the New Jersey Business Coalition are asking Gov. Phil Murphy to extend the state’s April 15 tax filing deadline if the federal government postpones the deadline for filing federal returns due to COVID-19 related hardships affecting taxpayers and recent tax law changes.
Last year, the IRS extended the federal income tax filing due date for the 2019 tax year from April 15, 2020 until July 15, 2020 in order to help taxpayers experiencing health and economic challenges due to the pandemic. That extension deferred federal income tax payments without penalties or interest, which meant that taxpayers did not have to file forms or contact the IRS about payment extensions.
“We recognize the difficulties a postponement of the filing and payment deadlines could create; however, COVID-19 and other circumstances necessitate action to ensure that the millions of affected taxpayers have sufficient time to meet their tax obligations,” the New Jersey Business Coalition letter stated. “If New Jersey does not conform to an IRS postponed filing deadline, it will, in effect, negate the benefits of the federal deadline extension.”
The Coalition noted that last year, New Jersey followed the federal government’s lead, but waited until April 13 to finalize the extension for the filing of state tax returns.
“Such a late decision, so close to April 15, caused chaos for New Jersey taxpayers and tax preparers,” the Coalition pointed out.
The Coalition asked for the state’s extension to mirror what the federal government decides, unless the federal deadline is extended into July, which is the start of the new state budget year in New Jersey.
“We are cognizant that it may be difficult to extend deadlines beyond June due to the impact on the state’s budget cycle,” the Coalition said. “Therefore, if the IRS decides to go with a date beyond June 30, New Jersey should provide an extension of as late in June as possible.”
A key reason cited by members of Congress and tax preparers for giving taxpayers extra time to file is a provision in the $1.9 trillion American Rescue Plan signed into law by President Joe Biden last week. The law contains a last–minute change to the tax code that makes the first $10,200 in unemployment benefits exempt from 2020 federal income taxes for households with income under $150,000.
The IRS has not yet decided how to accommodate this late change, which affects the tax returns of an estimated 40 million Americans. The existing 1040 Form does not reflect this partial unemployment tax exemption. The IRS must still figure out how to best implement the change going forward, as well as how it will deal with tax returns that were already filed before the American Rescue Plan was enacted.
To read the New Jersey Business Coalition’s letter to the Governor, go here.