Tax filing and payment delays have been a means of financial support for taxpayers while allowing them to avoid in-person interaction, whether with tax preparers, tax authorities, boards of directors, or others.
The Tax Foundation found that postponing an income tax payment date from April 15 to July 15, or delaying requirements for remitting sales or other taxes, can be significant for businesses reeling from the pandemic. It sounds good on the surface, but is it?
If your business cannot file on time, then yes, delay the tax payment. But deferring this payment when you could pay comes at a cost.
If you are deferring because you need the money, think twice. The tax liability you are deferring is not your money; tax collections are the property of the state. You’ve collected the money, you owe the money.
Businesses cannot use taxpayer dollars to fund their operations. Woe to the company that puts their hand in the state piggy bank and removes money they will never be able to put back in.
Deferring also means potentially giving up your vendor fee in the case of sales tax payment delays. That could be up to a 3% cost of the tax remitted to your business at a time when every dollar counts to fund disruptions, workforce changes, and supply chain gaps. You are going to have to pay the tax money anyway, so think hard before you defer and give up this revenue source now.
Get in touch with your TaxOps Advisor to discuss whether deferring makes sense for you business or Contact Us at SALTovation.
Let’s Talk Tax
Judy Vorndran can be reached at jvorndran@taxops.com or 720.227.0093.
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