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Important: The information contained in the Whitley Penn Tax Alert “IRS Issues Official Guidance on Tax Payment Deferral” sent
March 18, 2020 has been superseded and is no longer applicable. See below for updated information:
March 21, 2020 – On March 20, the IRS issued Notice 2020-18 that postpones the April 15, 2020 filing deadline to July 15, 2020. The new notice supersedes the previously issued Notice 2020-17 which provided a limited three-month deferral for tax payments due on April 15, 2020. The new IRS notice addresses the criticisms of tax preparers and lawmakers that the original notice created confusion for taxpayers by separating the due dates for filing and paying taxes.
Under the new notice, the date for affected taxpayers to file Federal income tax returns and make Federal income tax payments due on April 15, 2020 is postponed to July 15, 2020. Notice 2020-18 provides additional clarification that an “affected taxpayer” includes an individual, trust, estate, partnership, association, company or corporation. The notice also specifically provides that taxpayers are not required to file an extension of time to file on Form 4868 or Form 7004 in order to take advantage of the postponement.
The payment provisions of the new notice are similar to those contained in Notice 2020-17 and apply to both 2019 federal income tax payments and 2020 federal estimated income tax payments that are due on April 15, 2020. However, the $1 million limitation for individuals and other affected taxpayers and the $10 million limitation for corporations no longer apply. There is now no limitation on the amount of applicable tax payments that may be postponed. Payments made by July 15, 2020 will not be subject to penalties or interest. Generally, penalties and interest on postponed payments will begin to accrue on July 16, 2020.
Notwithstanding the new guidance, there are still certain unaddressed issues related to the filing and payment date postponement that remain open. These include the procedures that will need to be followed in order to obtain an extension of time to file income tax returns after July 15, 2020 and the treatment of tax filings and tax payments that are due between April 15, 2020 and July 15, 2020. We anticipate that the IRS will release additional guidance in the upcoming days regarding these and other issues related to the postponement.
Whitley Penn is closely monitoring this situation and all other COVID-19 related developments and will issue additional tax alerts as those developments occur. In the interim, please contact your Whitley Penn Tax Advisor if you have any questions or require any additional information.
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