Mnuchin considering delaying tax filing deadline again
Treasury Secretary Steven Mnuchin announced officials are considered further delaying the tax filing deadline as July 15 approaches.
Treasury Secretary Steven Mnuchin opened the door this week to a second extension of the 2019 annual tax filing deadline as Americans and the nation's economy continue to reel from the coronavirus pandemic.
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“It’s something I’m thinking about,” he said Tuesday during an interview with Bloomberg News. “As of now I’m not intending on doing that, but it’s something we may consider.”
Several groups have called on the IRS to further delay the tax deadline. That includes the National Taxpayers Union, which has advocated for an extension until Oct. 15.
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"It’s become clear that the U.S. economy won’t have bounced back by July as much as originally hoped," the Alexandria, Virginia-based organization wrote at the end of April. "Businesses will only start to reopen by July, and many individuals will still be working remotely, if they’re lucky enough to have kept their job."
In mid-March, Mnuchin announced the government was extending the deadline for filing taxes from April 15 to July 15, giving Americans three months longer than they typically would have to file their taxes.
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By extending the deadline, the federal government allowed individuals and businesses to hold onto their cash longer as they deal with the fallout from the outbreak of the virus. The first three-month delay injected about $300 billion of liquidity into the economy, according to Mnuchin.
Delaying tax payments again could provide much-needed liquidity to businesses struggling to recover from the prolonged lockdown. Although every U.S. state has started the process of gradually reopening, economists have cautioned that consumer demand will not return to pre-crisis levels until there's a vaccine or treatment for COVID-19.
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"The levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery," Federal Reserve Chairman Jerome Powell said last week during congressional testimony. "Much of that economic uncertainty comes from uncertainty about the path of the disease and the effects of measures to contain it. Until the public is confident that the disease is contained, a full recovery is unlikely."
Likewise, delaying tax payments for Americans would essentially act as a short-term loan.
"Instead of individuals and businesses sending tax payments to the federal government, they are able to keep it as a bridge to an improved economy when shutdowns are eventually eased," the National Taxpayers Union wrote.
If individuals are anticipating a tax refund this year, they should file their returns as soon as possible to get that money.
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Close to 46 million Americans have filed for unemployment benefits since a broad swath of the nation's economy came to a grinding halt. The depth and magnitude of job losses are without precedent; in the span of two months, the U.S. jobless rate surged from a 50-year low to an 80-year high.
The apparent trade-off in delaying the tax deadline is a loss of revenue for the federal government in the short-run.
"That said, bond market volatility has driven the interest rate on federal debt down sharply, meaning the ultimate financial cost of delay is small," the tax union said. "And in the context of Congress considering much more expensive policy responses, the impact of this move would be relatively modest."
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