The IRS extends the federal income tax payment deadline

After U.S. Treasury Secretary Steven Mnuchin’s announcement that the deadline for paying federal income taxes would be extended, the IRS released guidance on March 18 outlining the details. IRS Notice 2020-17 follows up on President Trump’s Emergency Declaration that, among other things, instructed Mnuchin to provide relief from tax deadlines for taxpayers adversely affected by the coronavirus (COVID-19) pandemic.

According to the notice, Mnuchin has determined that any person with a federal income tax payment due April 15, 2020, is affected by COVID-19 for purposes of the relief. The notice doesn’t extend the federal tax return filing deadline, only the deadline for making payments. Bear in mind, too, that states aren’t necessarily following suit regarding state income tax payments (although many states have announced their own COVID-19 tax relief).

Postponed payments

Under the notice, the due date for making federal income tax payments up to applicable limits is postponed to July 15, 2020. The limit for each consolidated group or corporation that doesn’t file a consolidated return is $10 million. For all other taxpayers, the applicable limit is $1 million, regardless of filing status. In other words, the $1 million tax limit applies equally to a single individual and to married individuals filing a joint return.

The relief is limited to federal income tax payments due on April 15 for the 2019 tax year and federal estimated income tax payments for the 2020 tax year that are due on April 15. It includes tax payments on self-employed income.

Penalties and interest

The notice also provides that no interest, penalty or additions to tax for failure to pay will be calculated on the postponed taxes for the period from April 15, 2020 to July 15, 2020. They will, however, begin to accrue on April 15 for payments in excess of the applicable limit ($10 million or $1 million) that aren’t paid by April 15.

Taxpayers who find themselves subject to such penalties or additions can seek reasonable cause relief for a failure to pay tax. They also can seek a waiver to the penalty for a failure to pay estimated income tax (the latter relief generally is limited to individuals and certain trusts or estates; it’s not available for corporations or nonprofits).

Turn to us with questions

Federal measures to mitigate the economic effects of the COVID-19 pandemic continue to roll out. We can help you stay on top of these developments and chart the best course forward

© 2020

Want important updates direct to your inbox?
Yes, please! New and timely information to keep you informed about tax, financial strategy, and business. 
Thank you for subscribing!

You may also be interested in

The law that could affect your 1099-K and your 2022 tax bill

The law that could affect your 1099-K and your 2022 tax bill

It has become a de facto standard, a lot of us do it. Over the past few years, apps like PayPal, Venmo, CashApp, and Zelle have made it easy and convenient to pay and accept payments for personal and business transactions.  Until 1/1/22… It wasn’t required for...

read more
CHIPS Act poised to boost U.S. businesses

CHIPS Act poised to boost U.S. businesses

The Creating Helpful Incentives to Produce Semiconductors for America Act (CHIPS Act) was recently passed by Congress as part of the CHIPS and Science Act of 2022. President Biden is expected to sign it into law shortly. Among other things, the $52 billion package...

read more

Empowering entrepreneurs to grow their business.

Download your free guide today, and get back in the driver’s seat of your business and your life.

Entrepreneurial Success Formula: How to Avoid Managing Your Business From Your Bank Account