Latest information as of March 25, 2020
After announcing on Tuesday, March 17, with guidance provided on March 18, that the tax return payment dates were pushed to July 15, 2020 (90 days) while leaving the filing deadline untouched, Treasury Secretary Mnuchin announced on Twitter on Friday morning, March 20 that the tax filing deadline has ALSO been moved 90 days to July 15, 2020. The IRS released further guidance Friday afternoon in Notice 2020-18 regarding this announcement.
Changes to Tax Filing Deadline
Under the prior guidance, the tax deadline was unchanged and returns remained due on April 15, 2020, for individual taxpayers and calendar year C Corporations. The prior notice allowed taxpayers to defer up to 1,000,000 in Federal Income Tax payments (10,000,000 for C Corporations).
Under the new guidance, the filing AND payment deadline for 2019 individual income tax and calendar year C Corporations has been postponed to July 15, 2020 (90 days). Along with this deadline change, there is no limitation on the amount of payment that may be postponed. As a result, now all payments due April 15 (for both 2019 individual income tax and 2020 First Quarter Estimated Payments) are now not due until July 15, 2020.
June 30th Fiscal Year Returns
The IRS expanded Q&A, released on Tuesday, March 24th, has stated that for any fiscal year returns due April 15, 2020, this deadline has been postponed to July 15, 2020. For clients with a June 30 fiscal year-end, currently on a valid 7-month extension, this means your return is not due until July 15, 2020.
IRA, HSA, MSAs Deadlines
In the IRS expanded Q&A, the IRS confirmed that the postponed filing deadline also postpones the deadline for making these contributions, as they are tied to the due date of the return.
Extensions Filed on July 15, 2020
For any taxpayers who still need an extension of time to file after July 15, 2020, they are still eligible to file Form 4868 to request an extension. The extension, normally for 6 months, is still based on the original April 15, 2020 filing deadline, and therefore will be due by October 15, 2020. To avoid interest & penalties and a potential invalid extension, taxpayers still need to pay by July 15, 2020.
Other Tax Returns & Deadlines
This notice only covers income tax returns due April 15, 2020. Any returns (such as payroll tax) still have the same due dates and payment requirements (which may be reduced under other legislative programs, such as the Families First Coronavirus Relief Act). Further, no guidance has been given, so exempt organizations should still operate under the assumption that their annual returns have a due date of May 15, 2020, for calendar year taxpayers. Absent guidance, taxpayers on installment agreements should still make payments under the terms of their agreement with the IRS.
New York State Conformity
In a welcomed move, Governor Cuomo announced in his Friday press conference that New York will follow the Federal due date, thereby extending these payments and returns to July 15, 2020. No formal NYS guidance has been released, but multiple media outlets are reporting this extension and it was announced during his press conference, so we feel clients should be able to rely on this extension. Many states base their income tax deadline on the Federal due date, so we will anticipate that all state income tax returns will be due July 15, 2020. As more state-specific guidance becomes available, we will share with our clients.
Original Post Shared on March 19, 2020
On March 18th, 2020, the IRS released Notice 2020-17, giving official guidance and more information on the proposed deferment of tax payments as first mentioned by Treasury Secretary Mnuchin on March 17th.
The notice states that any person with a Federal income tax payment, for an amount up to $1,000,000 (the applicable postponed payment amount), can be deferred until July 15th, 2020, without the imposition of any interest or penalties.
This postponement amount is capped at $1,000,000 per return, regardless of filing status. Therefore, both a taxpayer filing single or a couple filing married filing joint are eligible for a maximum of $1,000,000. Neither Head of Household nor Married Filing Separate were mentioned in the notice, however, it is our belief that the maximum is on a per return basis, up to a maximum of $1,000,000, with the notice stating this is the maximum “regardless of filing status.”
C Corporation Taxpayers can defer up to $10,000,000 of payments under the same timetable. S Corporations and LLCs do not pay any entity-level tax; their deferment is handled on the individual level.
There is no mention that taxpayers who owe in excess of this amount are ineligible for this relief and therefore, it is currently believed to be available to all taxpayers with a balance due.
The relief includes Federal income tax payments (including self-employment taxes) due on April 15th, 2020. This includes both any remaining balances due for 2019 and an estimated payment for 2020 due on April 15th, 2020.
The notice also stresses that this relief does not include an extension of the deadline (“No extension is provided in this notice…. for the filing of any tax return….”) and is only currently for Federal income tax. Taxpayers are still required to pay any excise taxes or Federal payroll taxes.
As it is absent a specific mention, taxpayers on installment agreements still need to be making payments pursuant to those installment agreements to stay compliant. No mention was made that if this deferral is allowed for any taxpayer who is in an installment agreement, which requires taxpayers to file and pay timely in future years. If more guidance on these matters is released, we will update accordingly.
It is currently unknown what the IRS response will be in relation to Automated Collection Efforts, Levies, Tax Notices and other enforcement actions. Some leading tax publications have claimed to see a memo detailing that some of these efforts will be curtailed as a result of the outbreak, however, no official guidance has been given.
Also note this deferment is only for Federal income tax; any state income tax or filings are still due April 15th, 2020, absent any notice from those agencies.
Edward McWilliams, CPA
Ed is a Director in the firm’s tax and business advisory practice focusing on providing services to middle market private companies across different industries as well as to early stage startups. Ed has over a decade of experience providing tax and business consulting services to these companies of different sizes and across different industries, bringing a broad and diverse knowledge base and strategic solutions to the many complex issues that businesses face.