COVID-19 Tax Relief: Extension to Pay

 Posted By Jordon N. Rosen, CPA, AEP

I thought I had seen it all after 42 years in practice. I was wrong. The events surrounding the Coronavirus pandemic that have changed our daily lives for the foreseeable future, will also have an impact on how we will be filing our 2019 income tax returns and making payments which are due on April 15.

Following President Trump’s declaration of a national emergency, Treasury Secretary Steven Mnuchin stated at a press conference on March 17, 2020 that individuals can defer tax payments up to $1 million for 90 days. On March 18, IRS issued Notice 2020-17 clarifying the provisions of that announcement. Here is what you need to know at this time.

  • The Notice covers any person with a Federal income tax payment due April 15, 2020, in an aggregate amount up to $1 million and up to $10 million for each corporate consolidated group or for each C corporation that does not join in filing a consolidated return. The term “person” includes individuals, trusts, estates, partnerships, associations, companies and corporations.
  • The Notice is only applicable with respect to Federal income tax payments, including self-employment taxes due on April 15. This includes the payment of Federal taxes due on April 15 for calendar year 2019, as well as first quarter 2020 Federal estimated tax payments.
  • No extension is provided for the payment or deposit of any other type of Federal taxes.
  • The Notice does NOT extend the April 15 deadline for filing your Federal tax return. If you cannot file your Federal return by the April 15 deadline, you must still file a request for extension by April 15 (for individuals, the extension is automatically granted until October 15). The payment of Federal taxes that would generally be paid in with the extension or tax return can be deferred until no later than July 15.**
  • If payment is received by the July 15 deadline, no interest or penalty will be assessed. Interest and penalty will begin accruing on payments received beginning July 16, 2020. (Interest and penalties will accrue on amounts over the $1 million/$10 million limits that are not paid in by April 15, 2020).
  • Certain taxpayers that may be subject to penalties despite the relief of Notice 2020-17 may seek a waiver of relief from penalties.
  • The Delaware Division of Revenue is expected to issue a Tax Information Memorandum stating that the State will follow the Federal rules for tax deferral. Tax returns or extension requests would still be due by April 30, but payments can be delayed up to 90 days.
  • We expect other states to follow suit as well. Please contact us with questions regarding a specific state.

**IMPORTANT REMINDER: If you file for an extension on April 15 and chose not to make a payment at that time and anticipate that you will not be able to file your return by July 15, you will still have to make the extension payment by July 15 (so consider if the additional deferral to pay is really worth doing.)

We at BLS understand and empathize with what our clients are going through during these trying times and will work effortlessly to assist you and answer your questions. Please do not hesitate to reach out to us with your questions.

Stay Safe.

Jordon and the entire BLS Team

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