20 May Tax Updates and Extensions for 2020
The IRS had announced that taxpayers have until July 15, 2020, to pay and file federal income taxes that were due on April 15. There will be no late-filing penalty, interest, or late-payment penalty due.
This relief also extends to additional tax payments, returns, and other actions. These extensions now generally apply to all taxpayers that have a payment or filing deadline on or after April 1, 2020, and before July 15. Individuals, estates, trusts, corporations, and other tax filers are qualified for this extra time, meaning that anyone, including citizens who live and work abroad, is allowed to wait until July 15 to file a 2019 federal income tax return and pay any due tax.
Estimated Tax Payments
Aside from the extended tax payment due date, the relief to estimated tax payments due June 15, 2020, is also extended. Any person or corporation that has to pay a quarterly estimated tax on or after April 1, 2020, can wait until July 15 to pay without penalty.
On April 9, 2020, the IRS published additional guidance in IRS Notice 2020-23. The most important expansions of the postponements to July 15 are:
- June 15 estimated tax payment
- April 15 estimated tax payment
- Any gift, income, or estate tax due dates (original and extended) together with their payments, which fall between April 1, 2020, and July 15, 2020
- All specified acts that are associated with estate, income, and gift tax filings from April 1, 2020, to July 15, 2020
The Notice states that the extension refers only to an extension to pay some income taxes that are due on April 15, 2020, but not to an obligation to file by April 15, 2020. Thus, taxpayers are still obligated to file either a completed tax return or a completed extension to file a tax return by April 15, 2020.
This Notice postpones the obligation to pay federal income tax (which includes the tax on self-employment income) that would normally be due April 15, 2020, to July 15, 2020. For individuals, the amount that can be postponed is the aggregate amount that they owe to the IRS, up to $1 million. For corporations, the amount that can be postponed is the aggregate amount that they owe to the IRS, up to $10 million for every consolidated group, and $10 million for every C corporation that is not part of a group. This is great news for thousands of tax professionals and taxpayers.
Notice 2020-23 expands the tax payment and filing extension for everyone (including individuals, partnerships, corporations, estates, and trusts) with a return or payment obligation due to be completed after April 15, 2020, and before July 15, 2020. This extension is automatic, which means no extension forms have to be filed to use the new deadline. However, if any other extension beyond July 15, 2020, is needed, then the appropriate form will need to be completed. It is also important to note that no extension will be allowed beyond the original regulatory or statutory extension date.