AICPA Releases Recommendations for 2021 1st Quarter Estimated Payments
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AICPA Releases Recommendations for 2021 1st Quarter Estimated Payments

1 year ago · 3 min read

AICPA Statement Calls Bifurcated Deadline “Extremely Fluid”

Washington, D.C. (April 9, 2021) - The American Institute of CPAs (AICPA) has released a statement and recommendations for taxpayers and tax practitioners on first quarter (Q1) estimated payments and Form 709 gift tax return extensions ahead of the April 15th deadline.

The situation created by the May 17th bifurcated filing and payment due date has caused uncertainty and strain on the millions of small businesses and self-employed workers, and others affected. “Despite our efforts, the IRS continues to maintain that the due date for taxpayers required to make a first quarter estimated tax payment will remain as April 15. We are aware that April 15 is fast approaching, and every day relief is not granted presents enormous challenges for many taxpayers and their CPAs. We remain grateful for the pending Congressional relief and hopeful that those of you continuing to struggle at this late hour will benefit,” the AICPA says in the statement.

The AICPA recommends taxpayers and tax practitioners consider the following:

  • Q1 2021 estimated tax payment

    • To ensure that the 1st quarter 2021 estimate is credited to April 15, the AICPA recommended course of action is to pay the estimate on a Form 1040-ES or make an online payment directed to 2021 on or before April 15. This recommendation is the most conservative approach given that it is uncertain that a payment with a Form 4868, even if paid by April 15, will be credited by the IRS as paid by April 15.

    • While the AICPA cannot advise on an authoritative solution, the hope is that small firm CPAs and those without a large network will have access to options, to create their own process or receive validation that they are not alone in their chosen approach.

    • Some CPAs have indicated that if the amount of the estimated tax payment is “immaterial,” they are including the payment with an extension at May 17 – not making an April 15 estimated payment - and informing their clients of the potential for additional calculated interest for one month. Others are planning to file extensions including a 1st quarter payment on April 15.

  • Form 709 gift tax return extensions:

    • The best option is to file the Form 4868 to extend both the Form 1040 and the Form 709 with a reasonable estimate by April 15, even though the Form 4868 for extending individuals is not due until May 17 this year.

    • The second option is to file Form 8892 by April 15 to extend gift tax returns. This option should be used when a reasonable estimate for the Form 1040 by April 15 is not possible.

BACKGROUND:

  • Feb 16, 2021: The AICPA sent a letter to the Department of the Treasury and the IRS calling attention to the hardship that millions of taxpayers and tax practitioners are facing while making good faith efforts to comply with their tax obligations. The AICPA called for relief from underpayment and late payment penalties for the 2020 taxable year.

  • Feb 24, 2021: The AICPA sent a letter urging the Department of the Treasury and the IRS to provide taxpayers with more certainty and stability by announcing any pending tax filing and payment deadline postponements. Additionally, the AICPA called for Treasury and the IRS to provide underpayment and late payment penalty relief, delay collection activities and expand the temporary e-signature relief to the millions of taxpayers affected and working through the challenges created by the COVID-19 pandemic.

  • March 2, 2021: A subsequent statement released by the AICPA again urged action by Treasury and the IRS and reiterated the need for filing and payment extension and urgency of doing it now.

  • March 4, 2021: The AICPA sent a letter to the Department of the Treasury and the IRS calling for the extension of the filing and payment deadline for the 2020 tax year to June 15, 2021.

  • March 16, 2021: The AICPA released a statement addressing criticism of a deadline postponement and reiterating the need for a payment and filing deadline extension to June 15th.

  • March 17, 2021: The AICPA released a statement following the announcement by the IRS that it would extend the filing and payment deadline for some – but not all – taxpayers for the 2021 tax season from April 15th to May 17th.

  • March 18, 2021: The AICPA released a statement in response to testimony provided by Commissioner Rettig before the House Ways & Means Oversight Subcommittee.

  • March 25, 2021: The AICPA and the NAEA sent a letter to the Department of the Treasury and the IRS expressing disappointment in the announcement to extend the filing deadline – but not the estimated payment deadline – to May 17th, which excludes many taxpayers and arbitrarily discriminates against different types of taxpayers.

  • April 1, 2021: Sixty Members of Congress, led by Representative Lloyd Smucker, sent a letter to IRS Commissioner Charles Rettig calling for Treasury and the IRS to reconcile the deadline postponement to include quarterly estimated payments.


Media Contact:

Veronica L. Vera
202-434-9215
Veronica.Vera@aicpa-cima.com

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