The IRS issued Notice 2020-18, Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic, which clarifies some provisions for extended tax returns:
- The due date for filing Federal income tax returns is automatically extended from April 15, 2020 to July 15, 2020.
- Taxpayers can also defer federal income tax payments due on April 15, 2020 to July 15, 2020, without penalties and interest regardless of amount owed. Interest, penalties, and additions to tax with respect to such postponed Federal income tax filings and payments will begin to accrue on July 16, 2020.
- The deferment applies to all taxpayers, including individuals, trusts, estates, partnerships, corporations, associations, and companies as well as those who pay self-employment tax.
- Taxpayers do not need to file any additional forms to qualify for this automatic federal tax filing and payment relief.
- Taxpayers who need additional time to file beyond the July 15 deadline, can request an extension by filing Form 4868 for Individuals or Form 7004 for Businesses.
- The relief applies only to income tax returns and income taxes, 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.
- The first quarter 2020 Estimated tax payments due on April 15, 2020 are extended to July 15, 2020. The second quarter 2020 estimated tax payments are still due on June 15, 2020.
In addition to the Notice the IRS posted 24 questions and answers on its website to further clarify items not addressed in the Notice. Some include:
- Any taxpayer whose Federal income tax return filing due date has been postponed from April 15, 2020 to July 15, 2020, the due date of that taxpayer’s section 965 installment payment has also been postponed to July 15, 2020.
- If you have already filed your 2019 income tax return that would have been due by April 15 and scheduled a payment of taxes for April 15, it will NOT be automatically rescheduled to July 15th, you can cancel and reschedule your payment at least two business days before the scheduled payment date. Depending on the method you used to schedule payment, you can call 888-353-4537 or contact your credit processor or use the email notification you received through IRS Direct pay confirmation number or Electronic Federal Tax Payment System.
- Because the due date for filing the Federal income the tax return has been postponed to July 15, 2020 the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020.
- Employers with a federal income tax return due on April 15, 2020 have a grace period under section 404(a)(6) to make a contribution to its workplace-based qualified retirement plan on account of 2019.
- Under this relief, you may make contributions to your HSA or Archer MSA for 2019 at any time up to July 15, 2020.
The IRS urges taxpayers who are due a refund to file as soon as possible as most refunds are still being issued within 21 days.
IRS Commissioner Chuck Rettig stated that, “even with the filing deadline extended, we urge taxpayers who are owed refunds to file as soon as possible and file electronically. Filing electronically with direct deposit is the quickest way to get refunds. Although we are curtailing some operations during this period, the IRS is continuing with mission-critical operations to support the nation, and that includes accepting tax returns and sending refunds. As a federal agency vital to the overall operations of our country, we ask for your personal support, your understanding – and your patience. I’m incredibly proud of our employees as we navigate through numerous different challenges in this very rapidly changing environment.”
Those filing will be able to take advantage of their refunds sooner. This deferment allows those who owe a payment to the IRS to defer the payment until July 15, 2020 without interest or penalties. Treasury and IRS are ensuring that hardworking taxpayers and businesses have additional liquidity for the next several months.
The State of California also extended their filing and payment due date to July 15, 2020.
Talk to your Tax Professional for additional guidance and updates.