[co-author: Ishani Kundu, Law Clerk]
In the wake of the Coronavirus pandemic, on March 18, 2020 the U.S. Internal Revenue Service issued guidance extending the Federal income tax payment deadline for any person with a Federal income tax payment otherwise due April 15, 2020.
What is the relief?
IRS Notice 2020-17 provides that Federal income tax (including self-employment tax) payments, including estimated income tax payments, due on April 15, 2020 may be deferred until July 15, 2020 without incurring any penalties or interest.
The amount of federal income tax that can be postponed by corporate taxpayers (a “consolidated group” or a stand-alone corporation) is $10,000,000, and the limit for all other taxpayers is $1,000,000.
Any interest, penalty, or addition to tax for failure to pay federal income taxes (otherwise due by April 15, 2020) by the extended deadline will be calculated with effect from July 16, 2020. However, all interest and penalties will accrue (without any suspension or deferral) on any federal income tax payments otherwise due by April 15, 2020 in excess of the specified threshold amount (stated above) which are due but not paid by April 15, 2020.
Who does this help?
The relief applies to any person with a Federal income tax payment due on April 15, 2020. This includes individuals, corporations, trusts, estates, and applies to both 2019 taxes as well as estimated 2020 taxes otherwise due by April 15, 2020.
What is not covered?
This does not postpone tax return filing deadlines, so tax returns (or extensions thereof) are still due on April 15, 2020.
This does not apply to any other tax payments due after April 15, 2020, such as fiscal year taxpayers with tax payments due after April 15, 2020 but before July 15, 2020, or estimated tax payments due on June 15, 2020.
This relief applies only to Federal income taxes and does not apply to any other Federal taxes, such as gift taxes, estate taxes, excise taxes, or other types of Federal taxes. The relief does not apply to any state or local taxes of any type, although a number of states have already adopted or are considering their own respective extensions.
We will continue to monitor this developing situation.