Deadline for Income Tax Returns and Payments Postponed to July 15 due to COVID-19

(Parker Tax Publishing March 2020)

The IRS announced that the due date for all income tax returns and income tax payments previously due on April 15, 2020, as well as the due date for making 2019 individual retirement account, health savings account, and Archer MSA contributions, has been automatically postponed to July 15, 2020. As a result of this postponement, the period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in calculating any interest, penalty, or addition to tax for failure to file income tax returns or to pay any income taxes due. Notice 2020-18.

Practice Aid: For a CLIENT LETTER explaining the postponement of the deadline for filing income tax returns and making tax payments, CLICK HERE.

Background

Under Code Sec. 7508A, the IRS has the authority to postpone the time for performing certain acts under the internal revenue laws for a taxpayer determined by the Secretary of the Treasury to be affected by a federally declared disaster as defined in Code Sec. 165(i)(5)(A). Code Sec. 7508A(a) provides that a period of up to one year can be disregarded in determining whether the performance of certain acts is timely.

On March 13, 2020, President Trump 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. The emergency declaration instructed the Secretary of the Treasury to provide relief under Code Sec. 7508A(a) from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency. In response, on March 18, 2020, the IRS issued Notice 2020-17, which postponed the due date for certain federal income tax payments from April 15, 2020, until July 15, 2020.

On March 20, 2020, the IRS issued Notice 2020-18, which restates and expands upon the relief provided in Notice 2020-17. As a result, Notice 2020-18 supersedes Notice 2020-17.

Relief Granted in Notice 2020-18

The Secretary of the Treasury determined that any person with a federal income tax payment or a federal income tax return due April 15, 2020, is affected by the COVID-19 emergency (i.e., is an affected taxpayer). The term "person" includes an individual, trust, estate, partnership, association, company, or corporation.

For an affected taxpayer, Notice 2020-18 provides that the due date for filing federal income tax returns and making federal income tax payments due April 15, 2020, is automatically postponed to July 15, 2020. There is no limit on the amount of the payment that may be postponed.

Practice Tip: Taxpayers do not have to file a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, or Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns.

The relief provided in Notice 2020-18 is available solely with respect to federal income tax payments (including payments of tax on self-employment income) and federal income tax returns due on April 15, 2020, in respect of the taxpayer's 2019 tax year, and federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for a taxpayer's 2020 tax year. No extension is provided for the payment or deposit of any other type of federal tax, or for the filing of any federal information return.

In addition, 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 file the federal income tax returns or to pay the federal income taxes postponed by Notice 2020-18. Interest, penalties, and additions to tax with respect to such postponed filings and payments will begin to accrue on July 16, 2020.

Finally, with respect to the due date for making individual retirement account, health savings account, and Archer MSA contributions for the 2019 tax year, the IRS website notes that the deadline for making such contributions, which is tied to the due date for filing federal income tax returns, is also extended to July 15, 2020.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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