Last week, in a pair of announcements issued on Wednesday and Friday, the U.S. Treasury provided relief from federal income tax filing and payment deadlines to U.S. taxpayers who have been adversely affected by the COVID-19 emergency and have a federal income tax payment or federal income tax return due on April 15, 2020. See IRS Notices 2020-17 and 2020-18. These Notices postpone to July 15, 2020 the obligation to file income tax returns and pay income taxes (including estimated income taxes) otherwise due April 15, 2020. No interest, penalty, or addition to tax for failure to file a federal income tax return or to pay federal income taxes will accrue between April 15, 2020 and July 15, 2020, for any return postponed by the Notices. While these Notices address both business and personal returns, this discussion is focused upon personal returns.
2019 Income Tax Returns
Notice 2020-18 postpones the due date for 2019 individual income tax returns to July 15, 2020 (rather than April 15 as is the case in "normal" years). There is no need to file a request for an extension in order to enjoy the benefit of the postponement – it is automatic.
That said, you may file your 2019 individual income tax return at any time and you should consider filing it early if you are expecting a refund.
Final 2019 Income Tax Payments
Individuals with unpaid income tax normally pay the amount of tax due as shown on their return when filed on April 15. Individuals requesting the automatic 6-month extension of time to file their individual income tax return would make an estimated payment with the application for the extension. Taxpayers under or overestimating the tax liability would make a final payment with or request a refund on their income tax return when filed by the extended due date.
The due date to make either a final or an estimated income payment for 2019 individual income taxes is postponed from April 15 to July 15, 2020. If you request an automatic extension to file your 2019 tax return to after July 15 (IRS Form 4868), you must make an estimated payment of your remaining 2019 income tax with that filing, just as you would were your return due on April 15.
The April 15 deadline for making contributions to IRAs and health savings accounts for 2019 has been changed to July 15th as well.
Estimated Payments on 2020 Income Taxes
Persons who are self-employed, rather than having taxes withheld from paychecks and remitted to the IRS by the employer, make quarterly estimated payments of the income tax due with a reconciliation on the final income tax return for the year. Those estimated tax due dates are April 15, June 15, September 15 and January 15 of the subsequent year.
Notice 2020-18 postpones the due date for the April 15 estimated payment of 2020 taxes to July 15. The postponement applies only the estimated tax payment otherwise due on April 15. As yet, no relief has been granted the estimated tax payment due June 15. Absent further relief self-employed taxpayers must pay estimated income tax on June 15 for the period April 15 – June 15 (2 months) and an additional payment on July 15 for the period January 1 – April 15. (Note that in addition to this administrative relief for taxpayers, Congress currently is considering legislation that would further delay the due date for the payment of estimated income taxes in 2020.)
S-Corporations, C-Corporations and Partnerships
The postponement of tax return filing date and tax payment dates applies only to "persons" with a federal income tax payment or a federal income tax return due April 15, 2020. The term "person" includes not only individuals but also partnerships, corporations and other taxpayers such as trusts and estates. The relief afforded by Notices 2020-17 and 2020-18 likely will have little impact on S-Corporations as most are calendar year taxpayers and the 2019 tax return for such taxpayers was due on March 16. Partnerships (most LLCs with two or more members are taxed as partnerships) do not file a tax return, but rather an "information return" (Form 1065). Notice 2020-18 is express that it does not extend the due date for information returns. Assuming the partnership uses a December 31 year end, that due date, for the 2019 tax year, was March 15, 2020. The Form 1065 for partnerships using a fiscal year is due the 15th day of the third month after the year end. Partnerships that anticipate a problem in satisfying that deadline should file a request for an automatic extension (IRS Form 7004).
State Tax Filing and Payment Deadlines
These IRS Notices apply only to federal income tax return and payment due dates; they do not alter your state tax return and payment liabilities. Many states have or are planning to follow suit. The Indiana Department issued a Press Release announcing it will conform to the federal tax filing and payment postponements. The Kentucky Department of Revenue announced it will adopt "most" of the income tax relief described in the Notices, with formal guidance to follow. The American Institute of Certified Public Accountants is tracking state tax developments relating to the COVID-19 outbreak on its website. See AICPA
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
