UPDATE

On March 20, 2020, the Treasury Department issued Notice 2020-18, which further clarifies the scope of the 90-day tax extension first announced on March 17, 2020, and which supersedes earlier guidance issued on March 18, 2020 in Notice 2020-17. Consistent with Treasury Secretary Steven Mnuchin’s tweet from earlier in the day, Notice 2020-18 provides that federal income tax returns otherwise due on April 15, 2020 may now be filed on or before July 15, 2020.

Notice 2020-18 expands federal tax relief in other ways. Under the previous notice, Notice 2020-17, the amount of taxes that could be deferred for 90-days was limited to $1 million in the case of individuals and $10 million in the case of C corporations. Notice 2020-18 has eliminated those limits.

The scope of the extension remains limited or unclear in other respects. In particular:

State and local tax returns and 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.

The extension does not apply to information returns.

• It is still not clear that installment payments of Code Section 965 transition taxes are covered by the extension, but the fact Notice 2020-18 provides an extension “in respect of an Affected Taxpayer’s 2019 taxable year” suggests that transition tax installment payments due on April 15, 2020 must still be made by that date.
• Non-income taxes, such as employment taxes, are generally not covered by the extension. Notice 2020-18’s reference to “Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for an Affected Taxpayer’s 2020 taxable year” suggests that it covers self-employment taxes as well as regular income taxes, but the notice’s language is not as clear as it could have been, so it remains less than 100% certain that it covers self-employment taxes as well as income taxes on self-employment income.
• Although Notice 2020-18 explicitly states that taxpayers are not required to request an extension to postpone the filing of their federal income tax returns from April 15, 2020 to July 15, 2020, it is unclear what a taxpayer must do if it desires an extension until a later date. If a taxpayer with an April 15, 2020 regular filing date needs an extension until October 15, 2020, for example, it is unclear whether the extension must be requested by April 15, 2020 or July 15, 2020, and it is also unclear whether such an extension would extend the due date to October 15, 2020 or January 15, 2021. Until this issue is clarified, taxpayers that believe that they will need an extension beyond July 15, 2020 should still request an extension before their regular tax filing due date.
• 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.

We expect that the federal government will offer further guidance, including an FAQ, in the future, and we expect to post periodic updates regarding such guidance. Stay tuned.

UPDATE

On March 20, 2020, Treasury Secretary Steven Mnuchin tweeted that tax returns ordinarily due on April 15, 2020 would be due on July 15, 2020, instead. The March 20, 2020 tweet expands the scope of the tax extension that was first announced on March 17, 2020, and that was clarified on March 18, 2020 by Notice 2020-17.

The scope of the extension remains limited or unclear. In particular:

• State and local tax returns and 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 still 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 (and it remains 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 Notice 2020-17 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.

We understand that the federal government will offer further guidance, including an FAQ, in the future, and we expect to post periodic updates regarding such guidance.

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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