On Wednesday, March 18, 2020, the IRS issued Notice 2020-17 to permit a deferral of certain federal tax payments due on April 15, up to a limit. The general framework had been described on March 17 by Treasury Secretary Steven Mnuchin at a White House COVID-19 press conference, but the final guidance did not include a delay to the filing deadline that had been expected by many.
Under the Notice, certain federal income tax payments that had been due on April 15, 2020 are now due July 15, 2020. Taxes owed under this new provision include only federal income tax and self-employment tax payments. In addition, the maximum deferral, or Applicable Postponed Payment Amount, is limited to $10 million for a C Corporation and consolidated group of corporations, and $1 million for all other taxpayers, including trusts and individuals. The Applicable Postponed Payment Amount of $1 million is regardless of a taxpayer’s filing status — both single and married individuals filing a joint return are eligible for the same deferral amount. The guidance is unclear regarding how such a limit would be applied to a married couple filing separately.
The deferral applies in aggregate solely to payments due on April 15, 2019 federal income tax balances due and 2020 first quarter federal estimated income tax payments. Somewhat surprisingly, the published notice does not state that this deferral would apply to 2020 second quarter federal estimated income tax payments due June 15, 2020. It is unclear if this omission was intentional or an oversight.
The notice provides no extension for the payment of any other type of federal tax, or the filing of any tax return or information return. Since the notice does not change the due date for the filing of any tax return or information return, timely filed accurate extension requests are still required for any returns that will not be filed by the April 15, 2020 due date. If an extension is not filed timely or is not accepted for some other reason, taxpayers may be subject to late filing and payment penalties.
Many states and cities have begun to issue guidance regarding filing and payment extensions due to the COVID-19 crisis. Please visit our blog for the most up-to-date information.
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