IRS Postpones 2020 Deadline for Certain Income Tax Payments

/ Freidel & Associates, LLC/

As we wrote earlier this week, it was expected that the Internal Revenue Service would be announcing an extension of the 2020 April 15th income tax deadline. Today, March 18, 2020, the IRS issued Notice 2020-17, wherein the Secretary of the Treasury postponed the April 15, 2020 income tax payment deadline for certain individuals and corporations to July 15, 2020 (and, potentially trusts, as well).

Importantly—and we cannot stress these enough:

  • The postponement of the income tax payment deadline does not apply to everyone.

  • The postponement of the income tax payment deadline does not automatically extend the deadline to file your income tax return.

  • The postponement of the income tax payment deadline applies only to income tax and self-employment tax payments.

  • The IRS only applies to FEDERAL income tax payments and each state will need to take action to change their own deadlines.

If you are unsure how this applies to you, please contact your tax advisor.

To fall within the eligible group for the postponement, individuals and corporations must have a federal income tax payment due on April 15, 2020—this can be for 2019 income tax liability or for the first 2020 estimated income tax payment. If an individual meets that first threshold, they are limited to an aggregated postponement of up to $1 million in federal income tax payments—for both the 2019 income tax liability and the first 2020 estimated income tax payment. For corporations that meet the first threshold, they are limited to an aggregated postponement of up to $10 million in federal income tax payments in the same way that individuals are.

For trusts, although trusts are not expressly listed in the notice, they appear to fall under the definition, and the IRS announcement states “all individual and other non-corporate tax filers,” giving trusts the same postponement for up to $1 million in federal income tax payments—for both the 2019 income tax liability and the first 2020 estimated income tax payment.

The $10 million corporate postponement limit is the same for each consolidated group or corporation filing a non-consolidated return. The $1 million individual postponement limit is the same regardless of status—it applies to both single individuals and married individuals filing jointly.

Again, however, the postponement does not automatically change the due date for an individual’s, trust’s, or corporation’s return. Only a timely filed IRS Form 4868 or IRS Form 7004 will change the due date for the returns themselves. While the typical scenario is that the Form 4868 or Form 7004 changes only the due date for the return with the tax payment still due on April 15—this year’s announcement flips that on its head, however.

As the IRS stated in its announcement, for taxpayers that are expecting a refund, those taxpayers should continue to file by April 15. Our team continues to diligently work on our clients’ returns at this time and does not currently plan on reducing our hours or our commitment to our clients.

Freidel & Associates, LLC provides this post for informational purposes only and this post does not constitute tax advice rendered by Freidel & Associates, LLC to the reader. All tax advice is personal to each client and simply viewing this post does not form an accountant-client relationship between you and Freidel & Associates, LLC. For all current clients of Freidel & Associates, LLC, if you are not sure how the IRS’s Notice affects you, please contact Paul or a member of the team for further information—although you can expect a member of the team to be in touch if this affects you.