Estimated tax payment deadlines would be changed to a uniform, quarterly schedule under a new bill introduced by Reps. Debbie Lesko (R-AZ) and Brad Schneider (D-IL). The Tax Deadline Simplification Act, H.R. 3708, would correct the “uneven intervals” at which estimated taxes now must be paid, which include two dates that do not correspond to typical calendar quarters: June 15 and September 15. Estimated tax payments are made each quarter to the IRS by those whose income is not subject to tax withholding.
The new bill sets the estimated tax installment deadlines to 15 days after the end of each quarter, moving the deadlines to January 15, April 15, July 15 and October 15. This rule would apply to individual taxpayers, small businesses, estates and trusts. Corporate estimated taxes are due by the 15th day of the 4th, 6th, 9th and 12th month of a corporation’s tax year.
“The IRS has set tax payment deadlines at uneven intervals, which can cause confusion for our nation’s hardworking taxpayers,” said Congresswoman Lesko. “I am pleased to introduce this common-sense legislation to change these deadlines to a uniform schedule and make it easier for taxpayers to save appropriately and comply with due dates.” She and 4 other colleagues offered similar legislation in 2021, H.R. 4214. Lesko notes that the change is supported by the AICPA and other professional accounting organizations.
In a letter to the bill’s sponsors, the AICPA explains that its support of the bill is based on the fact that the current payment deadlines of April 15, June 15, September 15 and January 15 are not tied to traditional quarters, which can “cause confusion for many individuals, including self-employed individuals, and create challenges to compute and pay timely.” The change would space the dates evenly three months apart at 15 days after the quarter end, making it easier for taxpayers to consistently pay estimated taxes and avoid penalties.
Estimated tax penalties generally are 0.5% of the amount unpaid for each month. To figure the potential penalty, taxpayers must know:
- The amount of the underpayment;
- The period when the underpayment was due and underpaid;
- The interest rate for underpayments published by the IRS.
Although individual tax bills are not likely to make it through Congress, this type of single-issue legislation could be wrapped into any larger tax package that is considered at the end of the year.
If you have questions about your estimated tax payments, contact your Frazier & Deeter tax advisor who can guide you on whether you have to pay, how much you have to pay and when you need to make the payments.