On March 18, 2020, the Internal Revenue Service (IRS) released Notice 2020-17 (the “IRS Notice”), which provides relief from federal income tax payment deadlines to U.S. taxpayers in light of the COVID-19 emergency.
The IRS Notice provides that any taxpayers with a federal income tax payment due April 15, 2020, may postpone payment until July 15, 2020. The applicable postponed payment amount is up to $10 million for each consolidated group or for each C corporation that does not join in filing a consolidated return and up to $1 million for all other taxpayers, regardless of filing status (including whether the taxpayer is filing as a single individual or the taxpayers are filing jointly as married individuals).
Interest, penalties, and additions to tax with respect to such postponed federal income tax payments will begin to accrue on July 16, 2020. Interest, penalties and additions to tax will accrue, without any suspension or deferral, on the amount of any federal income tax payments in excess of the thresholds described above that are due but not paid by April 15, 2020.
Taxpayers subject to penalties or additions to tax despite the relief granted by the IRS Notice may seek reasonable cause relief for a failure to pay tax or seek a waiver to a penalty for a failure by an individual or certain trusts and estates to pay estimated income tax under the Internal Revenue Code as applicable. Similar relief with respect to estimated tax payments is not available for corporate taxpayers or tax-exempt organizations.
The relief provided by the IRS Notice only applies for federal income tax payments, including payments of tax on self-employment income, due on April 15, 2020, in respect of a taxpayer’s 2019 tax year, and federal estimated income tax payments, including payments of tax on self-employment income, due on April 15, 2020, for a taxpayer’s 2020 tax year. No extension was provided for the payment or deposit of any other type of federal tax, or for the filing of any tax return or information return.
The IRS will continue to process tax refunds. In a statement on March 17, 2020, Treasury Secretary Steven Mnuchin encouraged taxpayers that are due a refund to file their 2019 federal income tax return as soon as possible so that they may take advantage of their refunds sooner.
Some states have extended their tax payment or tax return filing deadlines as well, but the requirements vary by state.