To our valued clients and associates,
The IRS recently issued Notice 2020-17 (included below as issued) and it has caused some confusion among taxpayers. Paresky Flitt & Company is here to help provide you with some clarity on the recently issued Notice 2020-17.
Has the IRS extended the filing deadline past April 15?
As of today, March 19, 2020, the IRS has not offered an extension of the filing date for tax returns past April 15. All returns are still due on April 15, 2020. What Notice 2020-17 does, is provide taxpayers who owe a balance due on their tax returns, within certain limits discussed later, to postpone paying their balance due until July 15, 2020.
How much of your balance due can you postpone?
Notice 2020-17 references a taxpayer’s “Applicable Postponed Payment Amount”. The applicable postponed payment amount is any balance due up to $1,000,000 for individuals (regardless of filing status) and up to $10,000,000 for each consolidated group or C-corporation. If you owe $1,000,000 or less as an individual ($10,000,000 or less for C-corporations), you can postpone your entire payment until July 15, 2020 without incurring penalties or interest. If you owe more than that amount, you will need to make a payment of the excess by April 15, 2020.
What about 1st quarter estimated payments due April 15?
These amounts are also able to be postponed until July 15, subject to the combined limits mentioned above.
Does this impact the payment of my state income taxes?
This is a Federal notice only. We are anxiously awaiting communication from all the states as to how they will be handling the April 15th deadline.
As always, we are here for you and will provide you up to date information as it becomes available to us.
Part III – Administrative, Procedural, and Miscellaneous
Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic Notice 2020-17
On March 13, 2020, the President of the United States issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act in response to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic (Emergency Declaration). The Emergency Declaration instructed the Secretary of the Treasury “to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency, as appropriate, pursuant to 26 U.S.C. 7508A(a).” Pursuant to the Emergency Declaration, this notice provides relief under section 7508A(a) of the Internal Revenue Code for the persons described in section III of this notice that the Secretary of the Treasury has determined to be affected by the COVID- 19 emergency.
Section 7508A provides the Secretary of the Treasury or his delegate (Secretary) with authority to postpone the time for performing certain acts under the internal revenue laws for a taxpayer determined by the Secretary to be affected by a Federally declared disaster as defined in section 165(i)(5)(A). Pursuant to section 7508A(a), a period of up to one year may be disregarded in determining whether the performance of certain acts is timely under the internal revenue laws.
III. GRANT OF RELIEF
The Secretary has determined that any person with a Federal income tax payment due April 15, 2020, is affected by the COVID-19 emergency for purposes of the relief described in this section III (Affected Taxpayer). For an Affected Taxpayer, the due date for making Federal income tax payments due April 15, 2020, in an aggregate amount up to the Applicable Postponed Payment Amount, is postponed to July 15, 2020. The Applicable Postponed Payment Amount is up to $10,000,000 for each consolidated group (as defined in §1.1502-1) or for each C corporation that does not join in filing a consolidated return. For all other Affected Taxpayers, the Applicable Postponed Payment Amount is up to $1,000,000 regardless of filing status. For example, the Applicable Postponed Payment Amount is the same for a single individual and for married individuals filing a joint return. In both instances the Applicable Postponed Payment Amount is up to $1,000,000. The relief provided in this section III is available solely with respect to Federal income tax payments (including payments of tax on self-employment income) due on April 15, 2020, in respect of an Affected Taxpayer’s 2019 taxable year, and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for an Affected Taxpayer’s 2020 taxable year. The Applicable Postponed Payment Amounts described in this section III include, in the aggregate, all payments described in the preceding sentence due on April 15, 2020 for such Affected Taxpayers. No extension is provided in this notice for the payment or deposit of any other type of Federal tax, or for the filing of any tax return or information return.
As a result of the postponement of the due date for making Federal income tax payments up to the Applicable Postponed Payment Amount from April 15, 2020, to July 15, 2020, the period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to pay the Federal income taxes postponed by this notice. Interest, penalties, and additions to tax with respect to such postponed Federal income tax payments will begin to accrue on July 16, 2020. In addition, interest, penalties and additions to tax will accrue, without any suspension or deferral, on the amount of any Federal income tax payments in excess of the Applicable Postponed Payment Amount due but not paid by an Affected Taxpayer on April 15, 2020. Affected Taxpayers subject to penalties or additions to tax despite the relief granted by this section III may seek reasonable cause relief under section 6651 for a failure to pay tax or seek a waiver to a penalty under section 6654 for a failure by an individual or certain trusts and estates to pay estimated income tax, as applicable. Similar relief with respect to estimated tax payments is not available for corporate taxpayers or tax-exempt organizations under section 6655.