2020 Maryland Tax Forms: Why Your Federal Tax Return Is Being Extended

Friday, April 30, 2021 – As you know by now, the Federal tax filing and payment deadline has been extended to May 17, 2021, and Maryland has been extended to July 15, 2021. However, as we reported earlier this month:  Maryland has not released a number of forms, including Form 511 (which is the form to be used by Maryland Pass-Through Entities that are electing to have Maryland tax be paid and then deducted at the entity level). The delay in the release of these Maryland forms prevents tax preparers from completing not only Maryland State returns, but federal tax returns, as well.  When the delay was first announced, we asked for your patience as we were told that we would have the necessary forms by April 15.

On Tuesday, April 27, we learned that we will not have the Maryland forms we need in time for the May 17, 2021, federal deadline. Taxpayers impacted by this delay include most S-corporations, partnerships, and their owners.

LSWG principals have reached out to legislative representatives, the Maryland Association of CPAs, and the American Institute of CPAs, in an appeal to get the federal deadline extended to coincide with Maryland’s (July 15, 2021). The response from the MACPA:  “Don’t hold out any hope.” Representatives from the MACPA went on to advise that the affected individual returns need to be extended by May 17. Consequently, we want our clients to know that if you are impacted by this situation, we will be extending your federal return (and any other state due by May 17). We will be in touch to let you know your estimated taxes due (which will need to be paid with the filing of the extension).

What’s the Holdup?

Legislative changes and technical corrections to the 2020 law necessitated changes to the tax forms. Maryland Form 511 cannot be released until the Comptroller knows that Senate Bill 787 has become law—and that has not yet happened. When will it happen? We were given the following legislative timeline:

• The General Assembly has 20 days following the end of session (which ended April 12, 2021) to present Senate Bill 787 to the Governor
• Once presented with the bill, the Governor has 30 days to:
  • Veto it,
  • Sign it, or
  • Allow it to become law without his signature

Until these actions occur, the Maryland Comptroller is prevented from providing guidance related to Senate Bill 787, including issuance of applicable tax forms.

Given this timeline, it could be June before guidance is provided, let alone forms released.

Again, although it is not our personal preference, if the preparation of your tax return is impacted by the delay in receiving these forms, we will extend your federal return by May 17 and we will contact you to let you know your estimated taxes due.

One additional thought about this situation:  This is frustrating for all of us (you as a taxpayer, us as your tax preparers), but in the end, no matter when your 2020 tax returns are completed, you will save federal income taxes by electing to take advantage of these new Maryland rules.