September Tax Deferral Will Save US Firms Thousands Of Dollars

by Mike Godfrey, Tax-News.com, Washington

30 September 2003

US businesses will be able to defer a total of $6 billion in tax payments this year thanks to legislation contained in the 2003 tax cut bill, signed into law in May.

This is because the legislation contained rules that allow firms to defer 25% of their quarterly tax payment, traditionally due on September 15, until October. As the September payment is the last of the federal budget year it will mean a significant portion of the taxes due will be pushed into the 2004 budget year, and according to the Congressional Joint Committee on Taxation, this could amount to as much as $6.33 billion.

Tax experts believe that this development can save many firms substantial amounts of money. Speaking to Forbes, Tom Ochsenschlager of accounting firm Grant Thornton explained that a mid-sized family owned firm would be able to defer $8 million from a $32 million quarterly tax payment. This could save the company at least $10,000, he calculated.

A similar event occurred during the 2001 tax year, when the government allowed the entire September 15 tax payment to be deferred until October. Tax experts believe the government has done this to offset the effects of the tax cuts which took place in that year, and also in 2003. The 2001 tax bill also made provision for firms to defer 20% of their September 2004 payment, which according to experts will boost tax revenue figures for 2005.

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