IRS Postpones April 15th Tax Return Due Date for Most Filers to July 15th

Last week, we wrote about the IRS’s decision to postpone the date that tax payments were due for most filers from April 15 to July 15. On March 21, 2020, the Internal Revenue Service revisited its early decision, removing the limitations on the amount of tax payment that taxpayers could defer to July 15 and extending the filing deadline from April 15 to July 15 for nearly all filers.

Whereas last week we advised that taxpayers looking for an extension to file should still file a Form 4868 or Form 7004 for an automatic extension, Saturday’s guidance removes that requirement and automatically extends any federal income tax returns and payments to July 15, 2020. It is expected that most states will take some sort of action to follow suit, but we would recommend consultation with your tax professional to insure that your state has taken such action.

Previously, the IRS was limiting the deferred tax payments to $1 million for individuals and trusts and $10 million for corporations. Now, the IRS has stated that “There is no limitation on the amount of the payment that may be postponed.” Critically, however, this applies to federal income tax payments only—both 2019 tax liabilities and 2020 first quarter estimates. And, whereas it was not previously clear if this included trusts, the IRS has defined the new extension to apply to “an individual, a trust, estate, partnership, association, company or corporation” as defined by the Internal Revenue Code.

For most taxpayers that are due a refund, it still makes sense to timely file a tax return and receive the refund. However, for those taxpayers who owe the federal government a federal income tax liability, the automatic extension provides three months of interest-free and penalty-free deferments to attempt to keep the economy fluid and liquid.

Importantly, for those taxpayers that have already filed their Forms 4868 or 7004—or that will need more time past July 15 and intend to do so—those remain a viable option to avail yourself of the automatic six month extension. Of course, the tax payments would still be due in July, even if the return itself would not be due until October.

Even with the extension, the team at Freidel & Associates, LLC continues to work on preparing our clients’ tax returns in a timely and efficient manner.

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.