March 19, 2020
On March 18, 2020, the IRS released Notice 2020-17 extending the due date, penalties and interest on certain income tax payments. The Notice implemented the following changes:
• Extended the due date for the payment of Federal income taxes (including self-employment tax) otherwise due on April 15, 2020 until July 15, 2020 (payment extension). It does not extend the payment or deposit of any other type of Federal tax (ie. payroll tax).
• It applies to the payment of Federal income taxes for the 2019 tax year, as well as first quarter estimated income tax payment for the 2020 tax year. It does not apply to the second quarter 2020 estimated tax payment that is due on June 15, 2020.
• The payment extension is available to all taxpayers and is automatic. Taxpayers do not need to file any additional forms or contact the IRS to qualify for the payment extension.
• The filing deadline for tax returns remains April 15, 2020, and the relief only applies to the payment of Federal income taxes. Penalties and interest on any remaining unpaid balance will begin to accrue on July 16, 2020.
• The IRS has reminded taxpayers that if the April 15, 2020, filing deadline cannot be met, they are eligible to request a six-month return extension to file an income tax return (return extension) . If the return is not going to be filed by April 15 the return extension must be filed.
• The payment extension is limited to a maximum applicable amount:
– up to $1 million (in aggregate including 2019 balance due and 1st quarter 2020 estimated tax payment) for individuals, regardless of filing status, and other unincorporated entities such as trust and estates; and
– up to $10 million for each C corporation that does not join in filing a consolidated return or for each consolidated group.
• Any interest, penalty, or addition to tax for failure to pay Federal income taxes postponed will not begin to accrue until July 16, 2020. The period from April 15, 2020, to July 15, 2020, will be disregarded but only for interest, penalties, or additions to tax up to maximum dollar amounts ($1 million/$10 million). Interest, penalties, and additions to tax will continue to accrue from April 15, 2020, on the amount of any Federal income tax in excess of the maximum dollar amounts.
• Georgia is expected to adopt similar provisions, but has not yet released any information on this topic.
We will continue to update our clients through email blasts, website posts and social media as additional information becomes available.