BACKGROUND: On March 18, 2020, the IRS issued Notice 2020-17 which postponed the due date for certain Federal income tax payments from April 15, 2020 until July 15, 2020. Since then the IRS issued Notice 2020-18 which effectively supersedes Notice 2020-17.
DETAILS OF NOTICE 2020-18:
Filing Due Date Postponement:
- For filing 2019 federal income returns due April 15, 2020 the due date is postponed to July 15, 2020.
- This applies to any 2019 federal income tax returns due April 15, 2020: Thus, it applies to:
- 2019 individual 1040 and 1040-SR tax returns
- 2019 trust and estate 1041 returns
- 2019 calendar year corporation returns
- 2019 association returns (Forms1120-C and 1120-H)
CAUTION: This postponement does not include the 1065 or 1120-S returns which were due on March 16. Nor does it include FBAR filings. However, FBARs have an automatic extension to October 15 which effectively makes October 15, 2020 the FBAR due date.
In addition, there is no extension of the statute of limitations for 2016. Those returns or claims for refund must be filed by April 15, 2020.
Payment Due Date Postponement:
- Any payments that would have been due on April 15, 2020 for the returns listed above are also postponed to July 15, 2020. This includes self-employment tax.
- Also postponed is the payment of the first 2020 estimated tax installment (Forms 1040-ES, 1041-ES, 1120-W). Notice 2020-18 does not postpone the June 15 estimated tax payments (or even address this issue), so for now the June 15th installment needs to be paid timely.
- There is no limit on the amount of the payment that can be postponed. Previous guidance in Notice 2020-17 included limits. But 2020-18 supersedes that notice and there are no limits.
- The payment postponement also applies to any early withdrawal penalties incurred in 2019.
PRESUMPTION: It is presumed, unless further guidance is provided, that if an additional extension to October 15 is desired, it would require filing an extension and the payment of the tax estimated on the extension to avoid the normal interest and penalties. For extensions filed before July 15, any payment would not need to be made until July 15. Thus, if filing the extension before July 15 automatic payment withdrawals could be scheduled for July 15.
Late Filing and Late Payment Penalties – No late filing or late payment penalties will apply during the 3-month filing and payment postponement period. Unless further relief is provided these penalties will resume after July 15, 2020.
Other Filings – Notice 2020-18 makes it clear that 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.
OTHER ISSUES NOT INCLUDED IN NOTICE 2020-18
2019 IRA Contributions – Normally the last day to make an IRA contribution for 2019 is the unextended due date of the 2019 tax return, i.e. April 15, 2020. That date has been extended to July 15, 2020. (Reference IRS COVID-19 Webpage Q&A #17).
2019 HAS & Archer MSA Contributions – Like the IRA due date, the due date for 2019 HSAs and Archer MSA contributions has been extended to July 15, 2020. (Reference IRS COVID-19 Webpage Q&A #17).
Cancelling Direct Withdrawals - If you have already filed a return that included direct withdrawals for the tax payment, and the withdrawal date has not yet passed, the direct withdrawal can be cancelled by the taxpayer calling the IRS e-file Payment Services 24/7 at 1-888-353-4537. But wait 7-10 days after the return was accepted before calling. Cancellation requests must be received no later than 11:59 p.m. ET two business days prior to the scheduled payment date.
No automatic extension - The withdrawals will not be automatically be extend to the July 15 date.
- New Scheduled Payment - A new automatic withdrawal will need to be made or a check sent for payment no later than July 15 due date. If sending a check, it is wise to obtain a proof of mailing from the P.O. or mail the check a couple weeks ahead of the July 15 due date.
Estimated Tax Payments - (Reference IRS COVID-19 Webpage Q&A #16).
- April 15 Estimate – The due for the April 15 estimate has been extended to July 15, 2020.
- June 15 Estimate – Due was not extended and continues to be June 15, 2020
Of course, one can continue make estimated tax payments in the manner and usual schedule.
Underpayment Penalties – No relief from the penalty for underpayment of 2019 taxes is provided. The only relief is via form 2210 for individuals and Form 2220 for corporations (Reference IRS COVID-19 Webpage Q&A #24.
California Filing & Payment Postponements – The FTB has postponed until July 15 the filing and payment deadlines for all individuals and business entities for:
- 2019 tax returns
- 2019 tax return payments
- 2020 1st and 2nd quarter estimate payments
- 2020 LLC taxes and fees
- 2020 Non-wage withholding payments
Other State Filing & Payment Delays – The AICPA has posted a public webpage that provides up-to-date information about filing and payment postponements state by state. Here is the link to that web page: