Gregory S. Dowell
March 18, 2020
In IRS Notice 2020-17: Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic, the IRS has provided tax payment relief for any person with a federal income tax payment due April 15.
For an affected taxpayer, the due date for making federal income tax payments usually due April 15, 2020 is postponed to July 15, 2020. Any person with a federal income tax payment due April 15, 2020, is affected by the COVID-19 emergency for purposes of the relief described in section III of the Notice (Affected Taxpayer).
Treasury Secretary Mnuchin’s March 17 announcement indicated that the extension was for 90 days, which would have brought the extension to July 14, 2020. The Notice thus provides a 91-day extension.
For an Affected Taxpayer, the due date for making federal income tax payments due April 15, 2020, in an aggregate amount up to the Applicable Postponed Payment Amount, is postponed to July 15, 2020. The Applicable Postponed Payment Amount is up to $10,000,000 for each consolidated group (as defined in Reg §1.1502-1) or for each C corporation that does not join in filing a consolidated return.
For all other Affected Taxpayers, the Applicable Postponed Payment Amount is up to $1,000,000 regardless of filing status. For example, the Applicable Postponed Payment Amount is the same for a single individual and for married individuals filing a joint return. In both instances the Applicable Postponed Payment Amount is up to $1,000,000.
The due date is postponed only for federal income tax payments for 2019 normally due on April 15, 2020 and federal estimated income tax payments (including estimated payments on self-employment income) due on April 15, 2020 for the 2020 tax year.
According to March 18, 2020 Special Edition of e-News for Tax Professionals, the payment postponement of up to $1,000,000 applies to income tax payments due on April 15, 2020 from trusts and estates.
The due date for calendar year C corporations to pay their 2019 income tax is April 15, 2020. Those corporations also must deposit the first installment of their estimated 2020 income tax on April 15, 2020. Thus, both of those types of payments are covered by the Notice. And, while calendar year S corporation 2019 taxes (e.g., the Code Sec. 1374 built-in gains tax) are due on March 15, 2020, and thus aren’t covered by the Notice, the first installment of a calendar year S corporation’s 2020 estimated tax is due on April 15, 2020 and thus is covered by the Notice.
The IRS has not provided a payment extension for the payment or deposit of any other type of federal tax (including payroll taxes and excise taxes) or for the filing of any tax return or information return.
As a result of the postponement of the due date for making federal income tax payments up to the Applicable Postponed Payment Amount from April 15, 2020, to July 15, 2020, the period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to pay the federal income taxes postponed by this notice. Interest, penalties, and additions to tax with respect to such postponed federal income tax payments will begin to accrue on July 16, 2020.
In addition, 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 Applicable Postponed Payment Amount due but not paid by an Affected Taxpayer on April 15, 2020.
Taxpayers subject to penalties or additions to tax despite the relief granted may seek reasonable cause relief under Code Sec. 6651 for failure to timely pay tax or seek a penalty waiver under Code Sec. 6654 for failure by to pay estimated income tax, as applicable.
Importantly, the Notice does not provide any filing date extensions. As of this date, all tax returns due on April 15th must either be filed or extended.