July 2, 2020
I read an article in Tax Adviser by
Isaac M. O'Bannon
on the findings of survey conducted in May on the financial impact of COVID-19 that I think you will find interesting. The survey was commissioned by TaxAudit.
According to a new survey, most taxpayers (61%) are deeply concerned that the financial impacts of COVID-19 may force them into tax debt, adding to the $131 billion already owed to the IRS by 14 million Americans. The survey also found that more than a third of taxpayers (37%) do not have the resources to pay 2019 taxes owed despite the deadline being extended to July 15.
With record high unemployment, the survey shows the burden faced by taxpayers due to the crisis, with many making the difficult choice to drain savings accounts and miss mortgage payments, property tax payments, and even some monthly bills just to survive. With concern mounting, taxpayers are also wondering if they will owe more in taxes next year because they have borrowed from their retirement funds, sold stock or liquidated investments, or started collecting Social Security benefits earlier than anticipated.
Key Survey Findings are:
- The majority (61%) are concerned they may end up in tax debt due to COVID-19.
- More than a quarter (27%) of those on a payment plan with the IRS for old tax debt are concerned about making payments once the deferment period ends in July.
- Nearly half (49%) are anxious about being contacted by the IRS regarding tax debt.
- Taxpayers are concerned about how COVID-19 will increase the amount of taxes owed next year
- 43% are worried about owing taxes next year.
- 61% of those who received a stimulus check are concerned they may owe more taxes next year.
- 37% of taxpayers who are receiving or have received unemployment benefits during COVID-19 are concerned they may owe an increased amount of taxes next year.
- 30% of taxpayers who have borrowed money from their retirement accounts during COVID-19 are concerned they will owe an increased amount of taxes next year.
- 28% of taxpayers who have sold stock or liquidated other investments are concerned they may owe an increased amount of taxes next year.
Small business owners are struggling with payroll taxes:
- 28% had to close their business or had to lay off or furlough workers.
- 28% applied for the Payment Protection Program loan and were approved while 15% applied for the loan and were denied.
- 43% are behind on making their payroll tax deposits and 39% are unaware of the fines for falling behind in making payroll tax deposits.
If you are unable to make payments by the July 15 deadline, you may be able to postpone the payment. Keep in mind that penalties and interest will begin to accrue if payment has not been made by the deadline. There are other options that may be appropriate. Let us know if you will need assistance.
Feel free to contact any member of our team at (610) 828-1900 (PA) or (732) 341-3893 (NJ) with questions. You can contact me at
[email protected] and
Marty at
[email protected]
.
As always, we are happy to help.
Stay safe,
David Gibbs, CPA, CCIFP, MBA
Principal
McCarthy & Company
Disclaimer: This alert is for informational purposes only and does not constitute professional advice. Information contained in this communication is not intended or written to be used as tax advice, and cannot be used by the recipient to avoid penalties that may be imposed under the Internal Revenue Code. We strongly advise you to seek professional assistance with respect to your specific issue(s).
