To help families and businesses cope with the coronavirus shutdown, the federal government pushed the income-tax filing deadline from April 15 until July 15. Ohio followed Washington’s lead and extended the state deadline for filing school- and income-taxes to July 15, too. The extra time for filing and paying taxes was a prudent step that kept money in taxpayers’ pockets and helped tax-collecting agencies process tax returns more safely during the quarantine.

Federal policymakers are now considering extending the federal tax deadline until September or even as late as 2021. Such a move would be a well-intended mistake that could have several unintended and adverse consequences for states, school districts, and taxpayers. 

First, states that choose to align their filing deadlines with the IRS and further extend their deadlines will make it more difficult for local governments and school districts to project revenues for the coming year. Some Ohio school districts, for example, use the state’s school tax as an additional source of funding. If Ohio extends the state tax-filing deadline, these school districts would need alternative revenue sources for part of the 2020-2021 school year. Similarly, a filing extension would apply additional pressure for Ohio to assist local governments that, like Ohio, must balance their budgets—and the longer the state and local governments must wait for tax revenue, the harder it will be to meet their balanced budget requirements.

Second, states that choose not to follow a second IRS deadline extension risk creating regulatory confusion, and compounding administrative and accounting costs for individual and corporate taxpayers. Different federal and state filing deadlines will inevitably lead to complexities and taxpayer questions for the IRS and state tax agencies that notoriously struggle to provide timely answers and guidance even during traditional filing schedules. Competing state and federal deadlines will exacerbate these delays and increase overtime costs at the IRS that the American taxpayers must ultimately pay. 

Rather than another filing extension, policymakers should maintain the current July 15 deadline and offer taxpayers meaningful tax relief. At the national level, for example, Congress should delay federal tax payments without charging penalties or interest. And at the state level, Ohio should continue to defer its commercial activity tax payments for businesses, strategically limit government spending, and draw on the rainy-day reserve instead of raising taxes. 

Another tax-filing delay may be well intended, but it could prove more harmful than helpful.

Rea S. Hederman Jr. is the executive director of the Economic Research Center at The Buckeye Institute and vice president of policy.