The Federal Tax Code permits the postponement of certain tax deadlines by reason of Presidentially declared disaster actions. On March 13, 2020, President Trump issued an Emergency Declaration (COVID-19 Emergency) to the Treasury Secretary to provide relief from certain specific tax deadlines. Please note this only applies on the Federal level. State income tax deadline and payments may still be due, although some states have already granted similar extensions.
Any person with a federal income tax payment or federal income tax filing requirement due April 15, 2020 is deemed an “Affected Taxpayer” and permitted tax payment relief under this declaration. The term “person” includes individuals, trusts, estates, partnerships, and corporations.
The Internal Revenue Service (IRS) just issued a notice issuance explaining important details about this tax payment relief. For an Affected Taxpayer, the due date for filing federal income tax returns and making federal income tax payments normally due April 15, 2020 is automatically postponed to July 15, 2020. The notice states: “There is no limitation on the amount of the payment that may be postponed.” In this communication, the IRS explains that Affected Taxpayers do not have to submit the customary extension forms to receive such relief deferral.
The relief applies to federal income tax payments—including payments of tax on self-employment income—due on April 15, 2020 for tax pursuant to the 2019 tax year. Additionally, federal estimated income tax payments due on April 15, 2020 for the 2020 tax year are also eligible for the 90-day deferral.
The IRS will disregard or waive any failure to pay penalties or interest that would otherwise apply to a payment or required income tax filings made after the April 15, 2020 deadline. In effect, this is a short-term, interest-free, penalty-free loan from the United States Treasury. This relief is specific to the payment of the amounts and type of tax described in the designated IRS Notice 2020-18, which can be found at www.irs.gov.
Please note this only applies on the federal level. State income tax deadlines and payments may still be due, although some states have already granted similar extensions. It’s important to consult with your tax advisor regarding how this payment extension may apply in your particular situation. For more information on tax planning strategies that may be beneficial before the filing deadline, please read 7 Ways to Make Tax Time Less Taxing.
This article is for informational purposes only and is not intended as an offer or solicitation for the sale of any financial product or service. It is not designed or intended to provide financial, tax, legal, investment, accounting, or other professional advice since such advice always requires consideration of individual circumstances. If professional advice is needed, the services of a professional advisor should be sought.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that, while this publication is not intended to provide tax advice, in the event that any information contained in this publication is construed to be tax advice, the information was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any matters addressed herein.