The IRS has provided tax payment relief for any person with a federal income tax payment due April 15.
On March 13, 2020, the President issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) in response to the ongoing coronavirus (COVID-19) pandemic (Emergency Declaration).
When the President invokes the Stafford Act, IRS is authorized to postpone the time for performing certain acts under the internal revenue laws for taxpayers determined by the IRS to be affected by a federally declared disaster or Emergency Declaration.
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 section III of the Notice (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 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.
The due date is postponed only for federal income tax payments for 2019 normally due on April 15, 2020 and federal estimated income tax payments due on April 15, 2020 for the 2020 tax year.
It is unclear if the payment postponement of up to $1,000,000 applies to income tax payments due on April 15, 2020 from trusts and estates.
The due date for calendar year C corporations to pay their 2019 income tax is April 15, 2020. Those corporations also must deposit the first installment of their estimated 2020 income tax on April 15, 2020. Thus, both of those types of payments are covered by the Notice.
The IRS has not provided a payment extension for the payment or deposit of any other type of federal tax or for the filing of any tax return or information return. Payroll taxes and excise taxes will retain their normal due dates.
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.
Taxpayers subject to penalties or additions to tax despite the relief granted may seek reasonable cause relief under Code Sec. 6651 for failure to timely pay tax or seek a penalty waiver under Code Sec. 6654 for failure by to pay estimated income tax, as applicable.
The Federal notice does not affect state income tax due dates. Taxpayers who are required to file stare income taxes should plan to file those returns on their normal due date.
Congress is currently working on more relief legislation that could affect the contents of this letter. Contact us for further information regarding this issue.