Business

GOP lawmaker offers bill to extend estimated tax payment deadline

Rep. Lloyd Smucker (R-Pa.) on Thursday rolled out legislation to extend the deadline for estimated tax payments for the first quarter of 2021, days before the current April 15 deadline.

The bill would extend the deadline for first-quarter estimated payments to May 17 so that it aligns with the deadline for individuals to file their 2020 federal income tax returns. People who make estimated tax payments, such as small-business owners and gig-economy workers, typically make them based on their previous year’s tax returns.

Smucker said that he is introducing the bill to help small businesses.

“A global pandemic is not the time for a punitive approach to small businesses, the backbone of our communities,” Smucker, a member of the House Ways and Means Committee, said in a news release. “I urge the IRS to make this commonsense change without delay and am thankful for the broad support for this legislation.”

The IRS last month extended the deadline for individuals to file their 2020 tax returns from April 15 to May 17, but it did not also extend the deadline for first-quarter 2021 estimated tax payments.

IRS Commissioner Charles Rettig said at a hearing last month that the agency decided against extending the estimated payment deadline to prevent wealthy Americans from avoiding interest and penalties.

But lawmakers and tax preparers argue that there are many apart from the wealthy who make estimated payments, and that failing to extend the deadline for estimated payments limits the benefits of the extension for 2020 tax returns for some taxpayers.

IRS data found that about 9.6 million individual tax returns for 2018 reported estimated tax payments.

Smucker introduced his bill after a bipartisan group of lawmakers wrote a letter to the IRS last week that called for the extension. The lawmakers’ efforts have the support of the American Institute of CPAs (AICPA).

“We are grateful to Representative Smucker and the other Members of Congress who are advocating on behalf of the small businesses and self-employed within their districts,” AICPA vice president of taxation Edward Karl said. “The consequences of the IRS’ decision to exclude estimated payments will have a detrimental impact on millions of taxpayers who file quarterly estimated taxes, many of whom have already suffered tremendously during this pandemic.”