As previously reported on Wednesday, March 18, the IRS released Notice 2020-17 which stated that federal tax returns were still required to be filed by the original due date, April 15, but that federal tax payments related to their 2019 tax return and 2020 1st quarter estimate could be delayed until July 15, 2020.
On Friday, March 19, Secretary Mnuchin tweeted the following:
“At @realDonaldTrump’s direction, we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.”
Early this morning, the IRS issued Notice 2020-18 which restates and expands the relief provided in Notice 2020-17. The IRS Notice was required to make Secretary Mnuchin’s statement official. Based on Notice 2020-18, both the filing and the payment deadlines of April 15 are delayed until July 15, 2020. This means that no extension is required as of April 15, 2020, but instead the tax return can be filed and any tax payment due with the 2019 tax return or 1st quarter estimated tax payments can be made by July 15, 2020.
IRS Notice 2020-18 states that the due date for filing Federal income tax returns and the requirement to make Federal income tax payments for an individual, a trust, estate, partnership, association, company or corporation, with a Federal income tax payment or a Federal income tax return due April 15, 2020, is automatically postponed to July 15, 2020. No extension is provided in the notice for the payment or deposit of any other type of Federal tax, or for the filing of any Federal information return. For example, payroll taxes would still need to be deposited at this time.
Notice 2020-18 reaffirmed that the relief provided is solely available with respect to Federal income tax payments (including payments of tax on self-employment income) and Federal income tax returns due on April 15, 2020. This includes the remaining 2019 Federal income tax liability payment, as well as the 1st quarter federal estimated income tax payment, that would normally be due on April 15, 2020. This does not include any 2nd, 3rd, or 4th quarter estimated income tax payments related to the 2020 taxable year at this time.
There is currently a Republican Senate bill, S3548, that includes sections 2102 and 2201 respectively, that would allow for individual and C Corporations 2020 estimated tax payments due prior to October 15, 2020 to be delayed until October 15, 2020. However, this bill has not been made into law at this time. We will update you accordingly as it moves through the legislative process.
Lastly, it is important to note, that under Notice 2020-18 there is no longer a limitation on the amount of tax payments due on April 15 that can be deferred until July 15. Under the prior notice, individuals could only defer up to a $1 million tax payment for 90 days and not incur an interest or penalty. Corporations could defer up to a $10 million tax payment without incurring interest and penalties. However, Notice 2020-18 specifically states there is no limitation on the amount of the payment that may be postponed. Therefore, if an individual’s 2019 remaining tax liability due on April 15 is $700,000 and their 2020 first quarter estimated tax payment due on April 15 is $500,000, they can defer then entire $1,200,000 payment until July 15, 2020.
Update regarding New York State Filing Deadlines and Payments
Governor Andrew Cuomo’s Budget Director Robert Mujica was quoted yesterday during a news conference stating “The (state) deadline is the federal deadline. We are tied to the federal deadline so our deadline will move to the end of July.”
While we expect the New York State deadline to be moved to July 15, the New York State Department of Taxation and Finance is still reflecting the following statement as of this morning:
“At this time, the New York State Tax Department has not extended the deadline to file personal income tax or other tax returns. We will update this page if new information becomes available.”
Update regarding New York City Filing Deadlines and Payments
As of today, New York City has issued a statement that they will waive all late filing, late payment or underpayment penalties for business and excise taxes due between March 16, 2020, and April 25, 2020. It is important to note that interest is not waived, and the statement does not refer to individual taxes.
The New York City statement is as follows:
The New York City Department of Finance recognizes that taxpayers and return preparers affected by the COVID-19 outbreak may be unable to meet certain New York City filing and payment deadlines. Therefore, DOF Commissioner Jacques Jiha is exercising his authority under the Administrative Code of the City of New York to allow for a waiver of penalties for DOF-administered business and excise taxes due between March 16, 2020, and April 25, 2020. Taxpayers may request to have the penalties waived on a late-filed extension or return, or in a separate request. If you file an extension or return or make a tax payment in accordance with these rules, you will not be subject to any late filing, late payment, or underpayment penalties. For purposes of the above filings, while late filing and late payment penalties are waived, interest, where applicable, at the appropriate underpayment rate, must be paid on all tax payments received after the original due date calculated from the original due date to the date of payment. All paper filings under this announcement should be marked “COVID-19” on the top center of the first page. The same relief will be provided to adversely affected electronic filers.
The information and advice we are providing for this matter relates to COVID-19 legislative relief measures. Because legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that could modify some of the advice and information provided to you, after the conclusion of our engagement. We therefore make no warranties, expressed or implied, on the services provided hereunder.