A Limited April 15 Tax Payment Extension

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Update: Notice 2020-17 described below was superseded on March 20 by Notice 2020-18.

Today the IRS issued Notice 2020-17, providing an extension of time to make certain federal income tax payments otherwise due April 15, 2020. The related returns or extensions still must be filed by April 15, 2020.

Up to a cap, payments of corporate, individual, trust, or estate federal income tax that are due on April 15, 2020 may instead be paid as late as July 15, 2020 without incurring interest or penalties. Amounts over that cap must be paid by April 15. It is possible that failing to file extensions or returns by April 15 will result in the imposition of penalties that otherwise can be avoided.

The amount of tax eligible for the deferral (the “cap”) is:

  1. $10,000,000 for each corporation or consolidated group, or
  2. $1,000,000 for other taxpayers.

The $1,000,000 cap applies to filers regardless of filing status. (A single 1040 filer’s cap is $1,000,000, and a couple filing a joint return receive the same $1,000,000 cap.)

Payments qualifying for the deferral include 2019 income tax (including self-employment tax, the 0.9% additional Medicare tax, and the 3.8% so-called “net investment income tax”), and 2020 quarterly estimated tax if the payment is due on April 15, 2020.

Payments excluded from the deferral are other types of tax, including employment tax or estate and gift tax. Also excluded are 2020 estimated tax payments due after April 15 but before July 15, 2020 (like second quarter estimated tax payments due on June 15 by calendar year individuals and entities).

These concessions by the federal government have no direct bearing on states’ income taxes, although a number of states are working on possible filing or payment extensions of their own. There are a number of other relief packages Washington is working on in reaction to the COVID-19 impact, and we will update you on those as they are finalized.

For more information, please contact your BNN tax advisor at 800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.