New Jersey taxpayers could get more time to file their state income-tax returns this year if federal officials relax the April 15 deadline for a second straight year amid the coronavirus pandemic.
While no decision has been announced by President Joe Biden’s administration, legislation introduced in Trenton this week seeks to give New Jersey taxpayers an extra month to submit their state tax returns in the event the federal Internal Revenue Service eventually delays its own tax deadline.
Under the proposal, state income and corporate-business tax returns and payments could be submitted by May 15 this year without any extra fees, penalties or interest.
The bill is sponsored by Senate Budget and Appropriations Committee Chair Paul Sarlo (D-Bergen), who said it’s important to keep the filing deadlines on the same schedule since most taxpayers prepare their state and federal taxes at the same time.
“The state and federal deadlines need to be aligned so that the benefits of (an) IRS extension are not lost,” Sarlo said. The bill, which has yet to be scheduled for a hearing, would have to pass both the Assembly and Senate and signed into law before the state’s April 15 deadline could be moved.
A second year of the pandemic
Last year, the federal government postponed the traditional April 15 tax deadline to July 15. That move came as shutdown orders were being enacted in New Jersey and in many other states to slow the rate of new COVID-19 infections.
Gov. Phil Murphy and lawmakers also extended the state’s fiscal year by three months since the delayed tax deadline meant final payments would be collected after the state’s traditional fiscal year ended on June 30.
Earlier this month, the New Jersey Society of Certified Public Accountants urged state officials to act quickly this time around if the federal government extends the filing deadline again.
“Last year’s New Jersey extension wasn’t finalized until April 13. Such a late decision, so close to April 15, caused chaos for New Jersey taxpayers and tax preparers,” said Ralph Albert Thomas, the group’s executive director and chief executive officer.
“We recognize the difficulties a postponement of the filing and payment deadlines could create,” he said. “However, COVID-19 and other circumstances necessitate action to ensure that the millions of affected taxpayers have sufficient time to meet their tax obligations.”
Calls for Biden administration to act
National accounting groups and other organizations have been calling on Biden for another filing extension.
U.S. Rep. Bill Pascrell, a New Jersey Democrat who chairs the House Ways and Means Committee’s oversight subcommittee, is among the chorus.
Last month, Pascrell (D-9th) and other members of the oversight panel sent a letter to the IRS commissioner saying an extension is warranted because “many Americans continue to face the same challenges that necessitated extending the filing season last year.”
On Tuesday, Pascrell signed onto a call for an extension that was backed by a bipartisan group of 100 House members.
“With limited in-person tax assistance at local tax preparation clinics, libraries and community centers, tens of millions of our constituents are facing the same logistical hurdles as last year,” the House members said in a letter to the IRS.
Sarlo cited similar concerns this week when he announced the corresponding state legislation.
“It’s important to individuals and businesses that New Jersey conforms to any change in the IRS deadline so that affected taxpayers have sufficient time to meet their tax obligations,” he said.
In a typical year, April income-tax payments are a major source of revenue for New Jersey’s budget that help keep spending in balance in the run-up to the closeout of the fiscal year.
Unlike last year, though, the one-month delay in Sarlo’s bill would mean the final payments would still be due before the end of the fiscal year. While that may somewhat ease accounting issues posed by a longer delay, it could still present a challenge for the state Department of Treasury since it would truncate the timeline for collecting and tabulating state returns.