HOUGHTON — The Treasury Department and Internal Revenue Service announced on March 17 that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021, to May 17, 2021. And though circumstances this year are unusual, because of the COVID-19 pandemic, it should be no more difficult to understand the rules this year than it was last year.

In fact, the IRS has made it into sort of a word game.

According to the IRS website, individual taxpayers can postpone federal income tax payments for the 2020 tax year due on April 15, 2021, to May 17, 2021, without penalties and interest, regardless of the amount owed. This postponement applies to individual taxpayers, including individuals who pay self-employment tax. Penalties, interest and additions to tax will begin to accrue on any remaining unpaid balances as of May 17, 2021. Individual taxpayers will automatically avoid interest and penalties on the taxes paid by May 17.

But, this relief does not apply to estimated tax payments that are due on April 15, 2021, the website goes on to state. These payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS by people whose income isn’t subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. Most taxpayers automatically have their taxes withheld from their paychecks and submitted to the IRS by their employer.

Individual taxpayers do not need to file any forms or call the IRS to qualify for this automatic federal tax filing and payment relief. Individual taxpayers who need additional time to file beyond the May 17 deadline can request a filing extension until Oct. 15 by filing Form 4868 through their tax professional, tax software or using the Free File link on IRS.gov. (the government is here to help). Filing Form 4868 gives taxpayers until October 15 to file their 2020 tax return but does not grant an extension of time to pay taxes due. Taxpayers should pay their federal income tax due by May 17, 2021, to avoid interest and penalties.

The IRS says that this only applies to individual federal income returns and tax (including tax on self-employment income) payments otherwise due April 15, 2021, not state tax payments or deposits or payments of any other type of federal tax.

So, to make the system of taxes easier in Michigan, the Michigan Department of Treasury also extended its deadline for individual income tax returns from April 15 to May 17, 2021 to conform with the federal government’s decision to extend the deadline for federal income tax filing this year. But do not expect more mercy from the state than from the Fed when it comes to first-quarter 2021 tax estimates.

Because the extension is limited to 2020 taxes, first-quarter estimates for tax year 2021remain due on April 15, 2021, according to a release from the Michigan Dept. of Treasury.

The extension is limited to the state individual and composite income tax annual return. The extension and does not apply to fiduciary returns or corporate income tax returns, and the notice does not apply to city, township and county income taxes. City income tax taxpayers should contact their respective tax administrators for information regarding that city’s potential conformity with IRS Notice 2021-59.

History of income tax

The history of income tax in America begins with the Colonial Period, states Investopedia. Taxes imposed by the British Parliament, while denying them representation in government, were one of the issues that lead to the American Revolution.

That citizens should not be subject to direct taxation was written into the first draft of the United States Constitution, but was ignored in the next century when the Abraham Lincoln Administration levied the first income tax to offset the cost of the Civil War. After the war, the tax, which was still unconstitutional, was repealed. But as Investopedia states, “it gave the federal government a taste for the revenue that income taxes could raise.”

Despite this, about 60 years later, the first income tax in the U.S. was levied to pay for the Civil War. When the conflict ended, the tax was repealed, but a new income tax was introduced in 1894, ostensibly to make up for lost revenues from reductions in U.S. tariffs, which shifted the financial burden from importation to the public.

The public was not impressed.

This tax was taken before the Supreme Court and declared unconstitutional.

However, the federal government had grown to love the public’s money, and to counteract the Supreme Court’s ruling, Congress drafted the 16th Amendment, which states, “The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

The amendment was ratified in 1913, clearing the legal hurdles to an income tax. The legislation was again taken to the Supreme Court, but this time it ruled that income taxes were now legal, due to the constitutional changes. The rule was issued on Jan. 24, 1916.

As Investopedia states: “…Benjamin Franklin lamented, ‘Nothing is certain but death and taxes.’ Since then, medical advances have made headway on at least delaying death, but we’ve consistently lost ground on the taxes.”