On March 17, 2020, Secretary of the Treasury Steven Mnuchin announced a 90-day extension for certain tax payments. On March 18, 2020, the U.S. Department of the Treasury issued Notice 2020-17, which clarified the scope of the announced extension. While the announced extension is welcome relief for some taxpayers, it is very limited in scope. The announced extension does not extend the regular April 15 tax filing deadline. What the announced extension does generally extend is the deadline for paying (1) 2019 taxes that are otherwise due with the tax return and (2) 2020 estimated income tax payments (including payments of tax on self-employment income) that would otherwise be due on April 15, 2020. In general, taxpayers who do not file their 2019 federal income tax returns by April 15 must still affirmatively request an extension of time to file.
Many types of tax payments are not covered by the extension. In particular:
- State and local tax payments due on April 15, 2020 are not covered by the extension. Taxpayers should check with their state and local tax authorities to determine what relief such authorities are offering.
- It is not clear that installment payments of Code Section 965 transition taxes are covered by the extension.
- Non-income taxes, such as employment taxes, are generally not covered by the extension (but it is unclear whether self-employment taxes due on April 15, 2020 are covered by the extension).
- For individuals, there is a $1 million limit on the income taxes that are subject to the extension. Although the notice seemingly attempted to clarify how the $1 million limit should be applied to taxpayers who file with a status of married filing jointly, it is still not 100% clear how the limit is to be applied to such taxpayers.
- For C corporations, there is a $10 million limit on income taxes that are subject to the extension, with consolidated groups of corporations treated as a single corporation for this purpose.
While Notice 2020-17 attempted to clarify how estimated tax payments are to be treated, it is less than 100% clear whether it was intended to cover self-employment taxes as well as income taxes. Moreover, it remains unclear what effect the extension may have on taxpayers who have not made adequate 2019 estimated tax payments or who have not had adequate tax withholding for 2019.
It is conceivable that the federal government will offer additional tax filing or tax payment relief in the future, and we expect to post periodic updates regarding such relief.
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