March 24, 2020 – The Treasury Department and IRS are extending the due date for filing of Federal income tax returns and Federal income tax payments otherwise due on April 15, 2020, to July 15, 2020, as a result of the ongoing Coronavirus (COVID-19) emergency. The extension is automatic and available to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate entities, as well as those who pay self-employment tax. Any interest, penalty, or addition to tax for failure to file or pay tax will not accrue until July 16, 2020, as a result of the extension.
Federal Income Tax Returns
The filing deadline extension to July 15, 2020, applies to the filing of all Federal income tax returns otherwise due April 15, 2020. The extension is automatic. Taxpayers do not need to file Form 4868 or Form 7004 or call the IRS to receive the extension. If taxpayers need additional time to file beyond the July 15 deadline, they can request an extension by filing the appropriate form. The filing extension does not apply to the filing of any Federal information return due on or before April 15, 2020.
The IRS has not yet provided guidance on whether the extension of the filing deadline to July 15, 2020, also extends the deadline for making contributions to an individual retirement account (IRA) or health savings account (HSA).
Federal Income Tax Payments
The deadline for making Federal income tax payments, including payments of tax on self-employment income, is also extended to July 15, 2020, for payments otherwise due on April 15, 2020. The extension applies to the payment of Federal income taxes for the 2019 tax year, as well estimated income tax payments for the 2020 tax year that are due on April 15, 2020. The extension is not available for the payment or deposit of any other type of Federal tax, such as payroll or excise taxes.
There is no dollar limitation on the amount of any Federal income tax payment that may be postponed. The guidance supersedes previous guidance in Notice 2020-17, I.R.B. 2020-15 that limited the extension to Federal income tax payments to up to $10 million for corporations and $1 million for individuals and noncorporate entities.
Despite the extension, the Treasury and IRS are encouraging encourages taxpayers to who are expecting a refund to file their Federal income tax returns as soon as possible to help stimulate the economy. “Even with the filing deadline extended, we urge taxpayers who are owed refunds to file as soon as possible and file electronically,” said IRS Commissioner Chuck Rettig.
Penalties and Interest
Any interest, penalty, or addition to tax for failure to file Federal income tax returns or failure to pay Federal income taxes is postponed and will not begin to accrue until July 16, 2020. The period from April 15, 2020, to July 15, 2020, will be disregarded as a result of the extension.
State Returns and Payments
The relief has no effect on state tax payments or state filing deadlines. Taxpayers are urged to check with their state tax agencies for those details.
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About the Author
Gregory J. Urban CPA, CVA
Greg’s main focus is on providing tax consulting, compliance and valuation services to privately held businesses and their owners. He has extensive experience advising clients on complex tax compliance issues, including tax credit optimization, mergers and acquisitions.