On March 18, 2020, Notice 2020-17 issued and gave taxpayers more certainty as to filing and payment information for this season’s returns. As reported in my post of March 18, 2020, the filing deadline of April 15th remains in place. The payment deadline is extended to July 15th (which is 91 days from April 15th, not 90 as initially reported). Individuals, regardless of filing status, can defer up to $1M in federal income tax payments. Corporate taxpayers can postpone up to $10M.
The relief is applicable to the April 15th deadline for tax year 2019, including self-employment taxes. Relief also extends to the April 15th due estimated payment for 2020. No relief is afforded any other types of federal taxes or to the filing of federal tax or information returns.
Calendar year C corporations, like individuals, are covered by the relief since payment on 2019 is due April 15th, and the first estimated 2020 payment is due April 15th. Calendar year S corporations, say for built-in gains tax, pay on March 15th, so they’re not covered by the Notice. But a calendar year S corporation’s first 2020 estimated tax payment is due April 15th and is thus covered.
Anybody notice something odd about estimated payments? Taxpayers can now pay their first 2020 estimated tax payment on July 15th. However, no relief was provided for the second payment due June 15th. As such, the second payment is payable before the first payment.
In e-News for Tax Professionals emailed from IRS on March 18, 2020, the Service provided the following answer to the question I posed in my post of March 18, 2020 – If you file your tax return or request an extension of time to file by April 15, 2020, you will automatically avoid interest and penalties on the taxes paid by July 15. Filing an extension, therefore, will not kill the 91-day interest and penalty free grace period. However, busy accountants will not be afforded the full six months extension as I suspect many July summer vacations will be interrupted working on extended returns in order to have the correct amount due calculated by July 15th.
Nick Spoltore is VP of Tax & Advisory Content for Surgent CPE. Mr. Spoltore is a graduate of the University of Notre Dame and of Delaware Law School. Before joining Surgent, he practiced tax and business law at the firm of Heaney, Kilcoyne in Pennsylvania and also in Delaware.