On March 20, 2020, the U.S. Department of the Treasury (Treasury) and the IRS issued Notice 2020-18, automatically postponing the federal income tax filing due date from April 15, 2020, to July 15, 2020. This guidance supersedes a previous notice in which the IRS had only postponed the April 15 tax payment deadline and limited tax payments allowed to be deferred to $1 million for individuals and $10 million for corporations.
In light of this new guidance, under Notice 2020-18, taxpayers can now defer filing and payment of federal income tax (including payments of tax on self-employment income) due on April 15, 2020, to July 15, 2020, without interest or penalties and regardless of the amount owed. This postponement applies to all affected taxpayers, including individuals, trusts and estates, corporations and other noncorporate tax filers.
Taxpayers don’t need to file any additional forms or call the IRS to take advantage of this postponement. Individual taxpayers who need additional time to file beyond this postponed deadline can request an extension by filing Form 4868 on or before July 15, 2020; businesses that need additional time must file Form 7004. Interest and penalties on any unpaid balance as of July 16, 2020, will begin to accrue on that date.
As mentioned in this previous BKD Thoughtware® alert, the postponement applies only to federal 2019 income tax payments and 2020 estimated tax payments due on April 15, 2020. The current guidance doesn’t affect the due date for second-quarter estimated tax payments. Therefore, while first-quarter estimated tax payments have been granted an automatic postponement until July 15, 2020, second-quarter estimated tax payments should still be paid by June 15, 2020.
Notice 2020-18 doesn’t provide relief for fiscal year corporations with extended due dates of April 15, 2020. Also, at this time, there’s uncertainty on whether the deadline for 2019 IRA contributions has been postponed. However, while the Notice was silent on these questions, the IRS did release a series of FAQs on March 24, 2020, stating that, because taxpayers can make IRA contributions at any time during the year or by the tax return filing date for that year, the deadline for making IRA contributions for 2019 also is extended to July 15, 2020. The FAQs also indicate that, for taxpayers with fiscal year returns due on April 15, 2020, whether that is the original due date or the due date on extension, the due date is postponed to July 15, 2020. Calendar-year tax-exempt organizations also should plan to complete their tax filings (Form 990) or file an extension (Form 8868) by May 15, 2020.
For state tax filing and payment relief, taxpayers should continue to monitor this American Institute of CPAs resource, which tracks state tax and legislative developments.
Due to the ongoing nature of the COVID-19 outbreak, Congress, the IRS and Treasury continue to release new guidance daily to provide relief and assistance to individual and business taxpayers. BKD has created a COVID-19 Resource Center to help disseminate important information for our clients and friends as we evaluate ways to mitigate the inevitable financial effects. Through this resource center, we’ll keep you up to date with relevant news, changing guidelines and new regulations.
Be sure to reach out to your BKD Trusted Advisor™ or use the Contact Us form below if you have questions about how these changes may affect you.