IRS Notice 2020-17 and 2020-18

By March 21, 2020 Tax & Business Tips

IRS Provides Relief For Making Tax Payments & Filing Tax Returns

Just as all aspects of our daily lives are constantly changing by the ongoing coronavirus disease pandemic, so too is the guidance issued by the IRS in its attempts to assist affected taxpayers.

On March 18, 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.  Notice 2020-17 provided only for the postponement of making certain income tax payments related to taxpayers’ 2019 taxable year and estimated payments for 2020 that were due on April 15.  It did not provide for the postponement of the due date for filing Federal income tax returns.  Additionally, the relief provided for the postponement of the tax payments was limited to certain threshold amounts.

On March 20, the IRS issued Notice 2020-18, which supersedes Notice 2020-17.  Notice 2020-18 is much simpler, more expansive, and less restrictive than Notice 2020-17.  It provides that the due date for filing  Federal income tax returns, and making Federal income tax payments, due April 15, 2020, is automatically postponed to July 15, 2020.  Taxpayers do not have to file extensions, and there is no limitation on the amount of the payment that may be postponed.

The relief provided is available solely with respect to Federal income tax payments (including payments of tax on self-employment income) and Federal income tax returns due on April 15, 2020, in respect of a Taxpayer’s 2019 taxable year, and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for a taxpayer’s 2020 taxable year.  No extension is provided in Notice 2020-18 for the payment or deposit of any other type of Federal tax, or for the filing of any Federal information return.  Interest, penalties, and additions to tax with respect to the postponed Federal income tax filings and payments will begin to accrue on July 16, 2020.

As mentioned above, the payments that can be postponed are only in respect of a taxpayer’s 2019 taxable year and 2020 Federal estimated income tax payments due on April 15.  The relief does not apply to the payment or deposit of any other type of Federal tax or the filing of any Federal information return.  For example, the relief does not apply to tax payments due in respect of a taxpayer’s taxable year other than 2019.  For example, taxpayers with obligations to make Section 965 installment payments (the 2017 “transition tax” from 2017 or 2018) on April 15 must make those payments by April 15, absent additional relief to the contrary.

To Summarize:

  • The due date for the payment of the balance of the 2019 tax due has been postponed from April 15 to July 15 without regard to the amount due.

  • The due date for the payment of the first 2020 estimated payment has been postponed from April 15 to July 15 without regard to the amount due.

  • The due date for filing Federal income tax returns has been postponed from April 15 to July 15.  Taxpayers do not have to file extensions.  Taxpayers will have to file extensions for an additional extension of time to file income tax returns from July 15 to October 15.  The filing of the extensions  extends only the time for filing the returns, not the payment of the tax, due on July 15.

  • Interest and penalties will start to accrue on July 16 on payments made after July 15.

  • The postponement of payments until July 15 applies only to 2019 income tax and 2020 estimated payments due on April 15, and not to any other type of tax or deposit (payroll taxes, for example).

  • The postponement of the due date for filing returns applies only to income tax returns in respect of a taxpayer’s 2019 taxable year and does not apply to the filing of any Federal information return.

 We will continue to provide updates and clarifications as additional guidance is issued by the IRS. If you have questions or concerns, please contact our office at 305.444.0999.