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) .” On March 18 & 20, 2020 and pursuant to this mandate, the IRS issued Notices 2020-17 and 2020-18 extending the date for making tax filings and payments due April 15, 2020 to July 15, 2020. Notice 2020-17 deferred the payment of income taxes, and did not extend filing deadlines. Notice 2020-18 was issued to supersede Notice 2020-17 to provide further relief to taxpayers by extended filing deadlines.
Highlights of Notice 2020-17:
- The IRS has determined that any taxpayer with a tax payment due April 15, 2020 is deemed 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 (regardless of filing status), the “Applicable Postponed Payment Amount” is up to $1,000,000. For a Consolidated Group of Corporations, or a C Corporation, the “Applicable Postponed Payment Amount” is up to $10,000,000.
- The “Applicable Postponed Payment Amount” applies to income tax payments due April 15, 2020. This applies to tax payments concerning the taxpayer’s 2019 tax year and any first quarter 2020 tax payment which is also due April 15, 2020. Second quarter 2020 estimated tax payments for individual taxpayers and corporate taxpayers are due June 15, 2020. Notice 2020-17 does not extend or change this payment date.
- 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.
- 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 provide any extension for the filing of information returns.
Highlights of Notice 2020-18
- Notice 2020-18 supersedes Notice 2020-17 and expands the relief by providing an automatic extension of taxpayer’s filing deadlines from April 15, 2020 to July 15, 2020.
- There is no limit on the amount of tax payment that a taxpayer may postpone.
- The period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in calculating interest, penalties, or addition to tax for failure to file the Federal income tax returns or to pay the Federal income taxes postponed by this notice. Interest, penalties, and additions to tax with respect to such postponed Federal income tax filings and payments will begin to accrue on July 16, 2020.