On Tuesday, March 17, Treasury Secretary Steven Mnuchin announced at a press conference that individuals and corporations can delay their tax payments until July 15 due to the coronavirus pandemic. Mnuchin stated that individuals can defer up to $1 million in payments for 90 days from the April 15 deadline and corporations can defer up to $10 million in payments for 90 days.
Mnuchin’s announcement did not delay the April 15 filing deadline. Taxpayers will still need to request an extension of time to file their tax return if not filed by the April 15 deadline.
Today, IRS Notice 2020-17 was issued providing clearer guidance. The notice addressed the following:
- The amount of income tax payment that can be postponed until July 15 includes:
- $10 million for a C corporation that does not file a consolidated return or for a consolidated group; and
- $1 million for all other affected taxpayers, regardless of filing status. This includes married individuals filing jointly or separately, single individuals, and trusts and estates.
- The payment relief includes 2019 Federal income and self-employment taxes that would be due on April 15 and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15 for the 2020 tax year.
All deferred payments must be paid by July 15 or penalty and interest will begin as of that date. Failure to pay amounts in excess of the amount allowed to be deferred by April 15 will result in penalty and interest on the excess accruing as of April 15.
No extension of time for the payment or deposit of any other type of Federal tax, or for the filing of any tax return or information return, has been granted at this time.
There remain some items that are unclear or problematic at this time:
- Second Quarter estimated tax payments for the 2020 tax year normally due June 15 do not receive relief under this notice.
- Contributions to Individual Retirement Accounts (IRAs) and Health Savings Accounts (HSAs) must still be made by April 15.
- Most states (including Illinois) have been silent as to an extension. It is unclear how most states will handle this filing season. We will continue to monitor all states going forward.
We will continue to follow these developments and will provide information on these issues as they are clarified. If you have any questions, do not hesitate to contact your ORBA tax professional.
Related Read: Message to Our Clients About COVID-19
What Can You Do to Make this Filing Season as Painless as Possible?
During this difficult time, we recommend that you:
- Continue to gather and prepare tax data based on the April 15 deadline. This will provide you with the most clarity around the options available to you, which may be further detailed by the IRS as we get closer to the April 15 deadline.
- As mail and other delivery services may become restricted, it is best to send all communications via email. If you need to get important documentation to us for the April 15 deadline, please forward your data through our secure email link. The link can be found in the email signature of your ORBA contact’s email.
- To protect your health and the health of our employees, many of us are working remotely. If you have any questions or issues that need to be discussed, our calls are being forwarded and you can still reach us by calling the office.
As you know, this is our busiest time of year, with tax filing and financial statement deadlines quickly approaching. We are committed to maintaining the quality and timeliness of service that you expect from ORBA. However, due to the unprecedented circumstances we all are experiencing, it may take longer for you to receive necessary data and for us to get everything completed. Please know that we are working diligently and will do our best to respond to you in the same timely manner that you have come to expect.
We will continue to send you updates as this situation evolves. We would like to take this opportunity to thank you for your continued support and wish good health for you, your families and your communities.
If you have questions or concerns regarding this Client Alert, please contact Mark Thomson at [email protected] or your ORBA advisor.