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The case for no more tax delays

By Bernie Becker

IT’S ALMOST JULY 15: It’s certainly understandable why state and local governments wouldn’t want to deal with another delay in federal tax deadlines.

States and localities are already on pins and needles waiting to see what kind of extra financial assistance — if any — Congress might offer in a next Covid-19 relief package, especially given the timing of when that measure might come together keeps slipping. So with most states about to spill over into a new fiscal year, state budget and tax officials just want to collect the revenue owed for 2019 and move on, as Pro Tax’s Brian Faler reported.

Another interesting concern, as laid out by Mark Mazur of the Urban-Brookings Tax Policy Center: If you keep pushing back when businesses have to pay, it can be harder for those businesses to pull it all back together when all those bills come due.

THE OPPOSING VIEW: The groups that work to lower tax burdens don’t exactly see it that way. But while most of their efforts are currently focused on making sure people don’t have to pay the government on July 15, there is something of a split on whether the filing deadline should stay the same.

For instance, there’s a who cares contingent that notes that anyone who wants to file after July 15 just needs to get themselves an extension. The major goal, said the conservative tax lobbyist Ryan Ellis, is “to prevent $500 billion to $1 trillion exiting the economy all at once in July. Filing deadlines are a non-monetary event. Conservatives can take it or leave it. Outside the scope.” (Ellis also said that forcing estimated payments for the first half of 2020 next month would be a bigger drag on the economy than any outstanding 2019 balances.)

Then there are those who can believe that extending payment deadlines is just a far simpler question. “We understand that there are arguments pro and con on extending the filing deadline, but there should be no doubt that extending the payment deadline is the right thing to do,” said Pete Sepp of the National Taxpayers Union.

And finally, you’ve got those pushing hard to keep the filing deadline and pushing back the payment deadline. Grover Norquist of Americans for Tax Reform wrote last week that pushing back the filing deadline would keep too many taxpayers from claiming refunds, and a spokesperson said that Norquist would be taking that case even more public in the coming days because the distinction between filing and payment deadlines is getting lost on some people.

There’s more presidential election year politics going on, too: A July 15 filing deadline would allow voters to “look now at your tax liability and compare it with what you owed and paid under Obama and would again under Biden,” Norquist said through the spokesperson, John Kartch.

SLOW GOING IN NOL LAND: It’s also understandable why there wouldn’t be a rush of corporations claiming NOL refunds yet — perhaps most notably, companies right now generally are carrying back losses from 2018 and 2019, and not from when the bottom dropped out in 2020, as pointed out.

Still, Marty Sullivan of Tax Notes also found that 133 corporations were getting between $5.3 billion and $8.9 billion in net operating loss refunds, based on filings with the SEC through June 24. (A new tweet from the publication suggests those figures rose to 143 companies and between $5.8 billion and $10.1 billion.)

Some notable companies, like the Cheesecake Factory, Penn National Gaming and AMC Entertainment Holdings, are among those that have already taken advantage of the more generous NOL rules. (There are a lot of oil-and-gas companies in there, too.)

But while the Tax Notes figures probably understate the NOL action so far (and a lot more is likely to come when 2020 losses get in the mix), Sullivan also notes that “in their SEC filings to date, some firms report they expect no significant benefit from the NOL provisions.”

WHAT TO WATCH FOR TODAY: The National Taxpayer Advocate's midyear report to Congress is expected to get released today, and look out for some reading on how the IRS is navigating the new challenges that Covid-19 has caused for taxpayers.

WHAT TO WATCH FOR THIS WEEK: The House is expected to vote on its infrastructure package, H.R. 2 (116), which has a lot of proposed tax changes — though that also might be the last action for awhile on some of those tax changes.


HOW ABOUT SOME SUPER SPREADING? Colombia’s value-added tax is 19 percent, so it’s probably no surprise that shoppers descended on retailers this month for the first of three sales tax holidays. President Iván Duque said the holiday did its job in giving a boost to the Colombian economy, with the government saying that retail sales quintupled that day. But as NPR notes, there’s another question at play here, too: Should the government be making shopping such an event when coronavirus cases are on the rise in Colombia? The mayor of Bogotá is among those questioning the wisdom of the sales tax holidays, with one more due on Friday and the other in the middle of July, even though Colombia has fewer Covid-19 deaths than its South American neighbors. Mayor Claudia López has suggested making the tax holiday only applicable on online sales, but the government isn’t looking like it wants to deviate from its current plan.


NATIONWIDE PROBLEM: Here's a tax angle to a lot of the racial reckoning currently happening — Pew's Stateline notes that "racially motivated or not, many tax assessors still routinely saddle Black and minority residents with property tax bills that are too high given the value of their homes."

Those cities include Chicago, Detroit, New Orleans and Philadelphia, as laid out in some cases by local newspaper investigations. But why is that the case? A variety of reasons — among them that minority property owners are both less likely to appeal an assessment than white home owners, and less likely to win when they do, according to research from the Washington Center for Equitable Growth. Another cause: When local and state laws cap the growth of property values, that policy frequently helps longtime home owners who are more likely to be wealthy and white.

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