Alert: Taxpayers Can Postpone Federal Payments Until July 15March 19, 2020
As a result of an emergency declaration issued on March 13, 2020 in response to the coronavirus pandemic, the Treasury Department has issued guidance (IRS Notice 2020-17) allowing taxpayers to delay making certain federal income tax payments until July 15, 2020 without interest, penalties or additions to tax. However, taxpayers must still file their tax forms by the April 15 due date or officially request an extension. Individuals can delay payments of up to $1 million regardless of filing status, and each corporate consolidated group or a corporation that is not part of a consolidated filing can defer payments of up to $10 million, according to a notice published yesterday.
This guidance applies to federal income tax payments (including extension payments and self-employment taxes) for the 2019 taxable year, and federal estimated income tax payments (and self-employment taxes) for the 2020 taxable year. The delays granted in the notice do not apply to information returns, tax returns, tax payments or deposits that are not described above or for federal income tax payments in excess of the threshold postponed payment amounts. Taxpayers who need more time to prepare tax returns should be aware of this guidance and file a form with the IRS requesting an automatic six-month extension.
The payment extension is part of the Trump Administration’s effort to curb the economic effects of the coronavirus pandemic. The delay is estimated to free $300 billion of liquidity in the economy, as individuals and businesses will have more time to address short-term cash-flow issues if they can delay their tax payments.
If you have any questions, please feel free to contact your tax advisor at Marks Paneth LLP.