A bill being introduced in the state Legislature would extend the state tax filing deadline from April 15 to May 15 as calls grow for the federal government to do the same amid the COVID-19 pandemic and economic turbulence.
Under the proposal sponsored by Senate Budget Chair Paul Sarlo, D-36th District, the state would extend the payment and filing deadlines by a month on business and gross income taxes.
That extension would also apply to a special tax payment method meant to allow business owners to circumvent some of the economic pain brought by the Trump-era $10,000 federal cap on state and local property tax deductions.
“The state and federal deadlines need to be aligned so that the benefits of the IRS extension are not lost. The Rescue Plan will deliver much needed support but it will also impact the finances of nearly everyone in ways that will likely require changes to filings and payments,” he said in a March 16 statement.
Last year, Gov. Phil Murphy and the state Legislature agreed to extend the filing deadline for state income and business taxes from April 15 to July 15, after the federal IRS offered the same extension.
“Once the American Rescue Plan is signed by President [Joe] Biden, the IRS is expected to extend the April 15 tax filing deadline,” reads a March 11 statement from the New Jersey Society of CPAs. “The [NJCPA] is calling on New Jersey lawmakers to follow suit.”
According to a March 16 letter to the IRS and Treasury Department – first reported by CNBC – a bipartisan group of 100 lawmakers are pushing for the Biden administration to extend the deadline to July 15.
Rep. Bill Pascrell, D-9th District, who chairs the House Ways and Means Oversight Subcommittee, is jointly heading that effort with Democrat Maryland Rep. Richard Neal.
“Returns received by the IRS have fallen significantly behind last year’s numbers. On top of all that, once it is signed into law, the American Rescue Plan will change the tax laws applicable to unemployment benefits received in 2020 and reported on returns filed during this filing season,” the two jointly stated on March 8.
“Taxpayers need more time to file accurate returns and get their questions answered by the IRS.”
Tax season started on Feb. 12, and as of the week ending March 5, the IRS received 56 million returns and processed close to 49 million of them, according to federal data. That’s compared to 68 million returns received and 65 million processed as of March 6 last year.
The American Institute of CPAs is asking the IRS to extend the deadline by two months, from April 15 to June 15
Last year’s three-month extension meant that the state had to in turn extend its budget for three months, expiring on Sept. 30 rather than June 30. That was in part for the state treasury and elected officials to fully gauge the effect of the pandemic on state tax revenue.
But Senate President Stephen Sweeney, D-3rd District, contended that he later regretted that decision.
Mass business closures enacted in a bid to clamp down on the spread of the virus have shattered the economy and driven up unemployment.
But the impact on the tax money for the state – from the sales, business and income tax – was far more blunted than some of state official’s worst fears. Stellar financial performance in those three income sources means the fiscal year 2022 budget, which runs July 1 to June 30, 2022, will not include any new tax increases.