[ Updated March 24, 2020 | 3:45pm ]
Federal measures to mitigate the economic effects of the COVID-19 pandemic continue to roll out almost daily. As of this writing, there are few details concerning the new federal income tax payment or filing deadline extension and specific requirements. However, it’s important to state what we know as of now:
- Outstanding Federal tax liabilities are now due July 15, 2020
- States are not all following the same Federal changes. Click Here for the most recent updates on Virginia Filing and Payment changes.
- In notice Notice 2020-18 issued by the IRS, there are no limits on the amount of payment that may be postponed.
- There are no additional forms required to postpone filing or paying Federal income tax returns.
- Federal payments delayed until July 15 will not incur interest or penalties.
Additional Guidance from the IRS
On March 17 it was announced by Treasury Secretary Mnuchin that individuals and corporations could receive a 90-day deadline extension on paying federal taxes. Originally there were limitations on tax payments of up to $1 million for individuals and $10 million for corporations. Just a few days later the IRS issued additional guidance in Notice 2020-18 which clarified, there are now no limits on the amount of payment that may be postponed.
Additionally, Notice 2020-18 added individuals, trusts, estates, partnerships, associations, and companies or corporations, as provided in section 7701(a)(1) of the Code qualify for the federal income tax payment delay. This also includes payments of tax on self-employment income.
Interestingly, previously issued Notice 2020-17 did not postpone the June 15th estimate payments. This means the second estimate for 2020 is due before the first estimate for 2020 because of this announcement.
State Income Taxes
Bear in mind that states aren’t necessarily following suit regarding state income tax payments (although some states have announced their own COVID-19 tax relief). This federal payment extension announced on March 17 applies to federal income tax payments due to be paid on April 15, 2020 only. Each state will need to address their requirements and possible payment and filing modifications separately.
During the press conference held on March 17, Vice President Pence encouraged taxpayers to continue filing in a timely manner. We believe this is to stimulate the economy for taxpayers who are due refunds.
We encourage clients to share their information with us as soon as possible so that we can determine the appropriate course of action in light of possible changes to the filing deadline and final requirements.