Posted by Abbey Garber
The Secretary of the Treasury announced on March 17 that individual taxpayers may defer payments to the IRS of up to $1 million (and corporations may defer paying up to $10 million) from the statutory deadline of April 15 to July 15, without being liable for interest or penalties. This announcement was made by Secretary Mnuchin during the daily coronavirus task force press conference at the White House. It is important to note that the filing deadline was not extended from April 15.
The IRS issued Notice 2020-17 with details on the extension, clarifying that the extension applies to 2019 income taxes due on April 15, 2020, and the first quarterly payment of estimated taxes for 2020, also due on April 15, 2020. Payments will be due on July 15, 2020; if they are not made, penalties and interest will begin to accrue on July 16, 2020. The extension does not apply to any other taxes, such as estate or gift taxes or amounts due under existing installment agreements, for example.
Taxpayers may obtain a six-month extension for filing their tax returns by applying for an automatic extension by filing Form 4868 (for individuals) or Form 7004 (for businesses). Historically, the six-month extension has not relieved taxpayers of the obligation to pay any amounts due by April 15. Based on the Notice, an extension to file by April 15 along with payment by July 15 would be sufficient to avoid penalties and interest. The tax return would then be due October 15.
If you have any questions, please contact the above author or the T&K tax attorney with whom you regularly work.
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