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COVID-19 tax extensions: what you need to know

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The Secretary of the Treasury has determined that any person with a federal income tax payment due April 15, 2020 can postpone such payment until July 15, 2020, as long as they meet certain requirements.

On March 13, 2020, President Trump issued an emergency declaration in response to the ongoing COVID-19 pandemic. The emergency declaration provides relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency.

More specifically, affected taxpayers can postpone payment of income taxes for three months past the original due date of April 15, 2020 up the applicable postponed payment amount. 

Notice 2020-17 states that the Secretary of the Treasury 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 and will, therefore, qualify as an affected taxpayer.

The applicable postponed Payment amount is up to $10,000,000 for each consolidated group (as defined in Treas. Reg. 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. This means the applicable postponed payment amount is the same for a single individual as it is for married individuals filing a joint return---both can postpone up to $1,000,000.

The COVID-19 emergency relief covers the following payments:

  • Federal income tax payments, including payments of tax on self-employment income, due on April 15, 2020, for the 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 the affected taxpayer’s 2020 taxable year.

Notice 2020-17 clarifies that no extension is provided 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 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 Notice 2020-17.

Affected taxpayers subject to penalties or additions to tax despite the relief outlined above may seek reasonable cause relief under Section 6651 of the Code for a failure to pay tax or seek a waiver to a penalty under Section 6654 of the Code for failure by an individual (or certain trusts and estates) to pay estimated income tax.

On March 20, 2020, the Secretary of the Treasury has announced that the tax filing deadline is being moved from April 15, 2020 to July 15, 2020. This will allow taxpayers three months after the normal deadline to send their returns without penalties. An official treasury notice has not been released yet.

The content contained in this article is for information purposes only. You should consult your own tax advisor for tax advice that applies to your particular situation.

Tara Fisher has been practicing international tax for 20 years. Her professional background includes working for the US Congress Joint Committee on Taxation, the national tax practice of PWC, the University of Pittsburgh and American University in Washington, DC. She is a licensed CPA and holds both an undergraduate and graduate degree in accounting from the University of Virginia.