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Tax Alert: IRS Formally Extends Date for Tax Payments from April 15, 2020 to July 15, 2020

Jim Brandenburg

Mar 18 2020

3 min read

On March 18, 2020, the IRS issued Notice 2020-17. This notice was the formal guidance that extended the date for making tax payments due April 15, 2020 to July 15, 2020, and this delay is in response to the current Coronavirus (COVID-19) situation.

Treasury Secretary Mnuchin had indicated this delay would be available to taxpayers, and the IRS followed with release today of Notice 2020-17 (please also see our Sikich article released March 17, 2020 that addressed this topic).

Here are selected highlights of Notice 2020-17:

The IRS has determined that any taxpayer with a tax payment due April 15, 2020 is affected by COVID-19 and is entitled to the relief offered in Notice 2020-17.
For taxpayers making tax payments due April 15, 2020, they are entitled to postpone until July 15, 2020 the “Applicable Postponed Payment Amount.”
For an individual or other non-corporate taxpayer, the “Applicable Postponed Payment Amount” is up to $1,000,000.
For a Consolidated Group of Corporations, or a C Corporation that does not join in the filing of a consolidated tax return, the “Applicable Postponed Payment Amount” is up to $10,000,000.
In addition, the “Application Postponed Payment Amount” applies to income tax payments (including self-employment taxes) due April 15, 2020. This applies to tax payments due on April 15, 2020 with respect to the taxpayer’s 2019 tax year AND any first quarter 2020 tax payment which is also due April 15, 2020.
Please note – the second quarter 2020 estimated tax payment for individual taxpayers and corporate taxpayers is due June 15, 2020, and this payment date was not extended or changed by Notice 2020-17.
In addition, interest and penalties will accrue, without any suspension or deferral, on the amount of any income tax payments in excess of the “Applicable Postponed Payment Amount” due, but not paid by the taxpayer on April 15, 2020.

Thus, if an individual taxpayer owes $3,000,000 in federal tax for the 2019 year on April 15, 2020, the taxpayer could defer payment of $1,000,000 of this tax until July 15, 2020, but if the remaining $2,000,000 of tax is not paid by April 15, 2020, this $2,000,000 amount will accrue interest and penalties as of April 15, 2020.

This deferral of payment does not apply to any other type of Federal tax, except the tax outlined in Notice 2020-17.
Notice 2020-17 does not impact the due date of the filing to the 2019 tax returns for individual (non-corporate) taxpayers or corporations. These taxpayers will still need to file their tax returns by April 15, 2020; or file an extension as they would in other years.

Further, many states were waiting for this formal IRS announcement to determine if the state will also offer some delay of tax payments for April 15, 2020. This state guidance may also likely be forthcoming in the next several days. In addition, the IRS may offer updates and clarifications as needed. Please contact your Sikich tax advisor with any questions.

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About the Author

Jim Brandenburg

Jim Brandenburg, CPA, MST, is a director with extensive experience and knowledge in corporate and partnership tax law, mergers and acquisitions, and tax legislation. His expertise includes working with owners of closely held businesses to identify tax planning opportunities and assist them in implementing these strategies.