IRS Issues Guidance on Extended Due Date for Tax Payments

March 18, 2020 | Kristine Tidgren

Update: On March 20, 2020, the IRS superseded this notice with Notice 2020-18. An automatic extension now applies to payments AND tax return filings otherwise due on April 15, 2020.

IRS has just issued guidance regarding the tax payment deadline extension Secretary Mnuchin announced on March 17. The relief is granted in response to the Stafford Act Emergency Declaration President Trump issued on March 13 in response to the COVID-19 crisis.

Notice 2020-17 states that the due date for making federal income tax payments due April 15, 2020, is postponed to July 15, 2020. This delay impacts payments for C corporations and consolidated groups in an amount up to $10,000,000. For other taxpayers, the delay applies to payments in an amount up to $1,000,000, regardless of filing status. The relief only applies to federal income tax payments (including payments of self-employment tax) due on April 15, 2020, for the 2019 tax year, and federal estimated income tax payments (including payments of self-employment tax) due on April 15, 2020, for the 2020 tax year.

The notice does not provide an extension for the payment or deposit of any other type of federal tax, or for the filing of any tax return or information return.

Interest, penalties, or addition to tax for failure to pay the federal income taxes postponed by the notice will not begin to accrue until July 16, 2020. The Notice reminds taxpayers that for relief not granted by the Notice, taxpayers may seek reasonable cause relief under section 6651 for a failure to pay tax or seek a waiver to a penalty under section 6654 for a failure by an individual or certain trusts and estates to pay estimated income tax .

While this Notice does not extend the tax return deadline, individual taxpayers are still eligible to seek an automatic extension of time to file. In that case, their tax would be due July 15 and their return would be due October 15. The IRS has stated in its concurrently issued e-news for tax professionals that taxpayers who file their tax returns or request an extension of time to file by April 15, 2020, will automatically avoid interest and penalties on the taxes paid by July 15. The IRS reminded individual taxpayers that the easiest way to request a filing extension is to electronically file Form 4868 through their tax professional, tax software or to use the Free File link on Businesses must file Form 7004.

A number of question remain in the face of the Notice. One is whether taxpayers who have already scheduled a withdrawal for April 15 can cancel that payment and reschedule it for July 15. Another is why second quarter estimates appear to remain due on June 15 when first quarter estimates are not due until July 15.

We will continue to issue updates as we receive further information.