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March 22, 2020

U.S. Tax Payment Deferred until July 15, 2020

*UPDATED March 22, 2020*

On March 20, 2020, the IRS issued Notice 2020-18 which provided additional relief to taxpayers affected by the COVID-19 virus pandemic.

The normal filing deadline of April 15, 2020, has now been extended to July 15, 2020.  This extension is applicable to individuals, trusts, estates, partnerships, and corporations and applies automatically without filing a request for an extension on form 4868 or 7004.  Any interest and penalties for unpaid taxes will not start to accrue until July 16, 2020.

In addition, the previous limits noted below on the amount of tax payment that can be deferred to July 15, 2020, and avoid penalties and interest have been removed.

*POSTED March 19, 2020*

Following U.S. Treasury Secretary Steven Mnuchin’s announcement on March 17, the IRS issued Notice 2020-17 which allows U.S. taxpayers to defer the payment of Federal income tax until July 15, 2020, without incurring the failure-to-pay penalty and interest up to the specified payment amount:

  • Individuals up to $1,000,000 of tax owing

  • Corporations up to $10,000,000 of tax owing

However, at this time there was no mention of a change to the filing deadline and the tax return filing due dates remain the same.  For individual taxpayers, it is April 15, 2020, with an automatic extension to June 15, 2020, for individual taxpayers residing outside of the U.S. as of April 15, 2020.  It is also unclear if the IRS will waive the failure-to-file penalty if the filing deadline is not met.

Treasury Secretary Mnuchin encourages taxpayers to file their tax returns by the April 15 deadline to the extent possible so that they can receive refunds sooner.  An additional extension is still available which will allow tax returns to be filed by October 15, 2020.

Many states are adopting different measures for the filing and payment deadline extensions and each state must be checked carefully.

The government agencies are coming up with measures to assist citizens and residents on a daily basis and further changes and clarifications may be made in the days to come. In the meantime, U.S. taxpayers should ensure that they timely file all U.S. Federal and State tax returns.

The above content is believed to be accurate as of the date of posting. Canadian and U.S. tax laws are complex and are subject to frequent changes. Professional tax advice should be sought before implementing any tax planning. Manning Elliott LLP cannot accept any liability for the tax consequences that may result from acting based on the information contained herein.