The Internal Revenue Service (IRS) has released additional information on the delayed payment and filing deadlines to ease the burden on taxpayers during the COVID-19 pandemic. We’ve written previously about the deferral of the federal income tax payments and filing obligations and initial guidance released last month. Ohio has also followed the federal government in the deferral, which we’ve written about here.
The Treasury Department and IRS announced that taxpayers can generally defer federal income tax payments and filing obligations due on or after April 1, 2020 and before July 15, 2020, to July 15, 2020, without penalties and interest, regardless of the amount owed.
This deferment applies to all taxpayers, including individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax. There is no limitation on the amount of any payment postponed (a prior notice published by the IRS only allowed for deferring payments subject to certain limitations).
No additional forms need to be filed to qualify for this automatic federal tax filing and payment relief.
The initial guidance, Notice 2020-18, impacted any person with a federal income tax payment or federal income tax return due April 15, 2020. No extension was initially provided for the payment or deposit of any other type of federal tax (non-income taxes), or for the filing of any Federal information return.
However, the IRS has since followed-up with Notice 2020-20, which provides a similar automatic deferment for federal gift and generation-skipping transfer tax payments and returns, and Notice 2020-23 which extends almost all tax filing and payment deadlines falling on or after April 1, 2020, and before July 15, 2020. Expanding on the earlier notices in response to the COVID-19 pandemic, this relief applies to individuals, estates, corporations, and other non-corporate tax filers, including fiscal-year filers.
Notice 2020-23 also extends relief to the full list of “time-sensitive actions” listed in Revenue Procedure 2018-58 (which lists actions that can be postponed due to a federally declared disaster). Included in this list are the 45-day identification period and the 180-day exchange period for like-kind exchanges under IRC Section 1031.
Notice 2020-23 also includes as a “time-sensitive action” a taxpayer’s election to invest in a qualified opportunity fund (QOF). Generally a taxpayer is required to invest in a QOF during the 180-day period beginning on the date of the sale or exchange giving rise to the gain. Taxpayers now have until July 15 to make the election if the 180-day-period ends April 1 through July 14.
The relief provided by the IRS is available for the following items that would be due between April 1, 2020 and July 15, 2020:
- Federal income tax payments, which includes payments of tax due on self-employment income for the 2019 taxable year
- Federal income tax returns due for the 2019 taxable year,
- Federal estimated income tax payments due for a taxpayer’s 2020 taxable year
- Federal gift tax or generation-skipping transfer tax payments
- Federal gift tax or generation-skipping transfer tax returns
- Certain Excise tax payments
- Exempt organization business income tax and other payments and return filings
- Certain information returns
The IRS has postponed the filing and payment of certain Federal taxes reported on the following forms, among others:
- Form 1040, 1040-SR, 1040-NR, 1040-NR-EZ, 1040-PR, 1040-SS
- Form 1041, 1041-N, 1041-QFT
- Form 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-SF
- Form 1065
- Form 8960
- Form 8991
- Form 709
- Form 706
The IRS has confirmed that the relief applies to section 965 installment payments due on April 15, 2020.
Please note that the above lists do not include every potential obligation that can be delayed.
Penalties and interest
No additional interest, penalty, or addition to tax will accrue from April 1, 2020 to July 15, 2020 for failure to pay the Federal taxes or file the Federal returns delayed by the notices. Such items will begin to accrue on July 16, 2020 if payment or filing is not completed by the extended deadline.
State & local income taxes
Please note that the deadline extension offered by the IRS does not negate a taxpayer’s obligation to generally pay its state and local income taxes by April 15. While most states, including Ohio, have changed the deadlines for state income tax filings to match the new federal deadline, the state deferral provisions do not necessarily match the federal deferral provisions. This is a fluid and quick-changing issue. Visit aicpa.org for updates on state tax filing and payment deferrals.
Information about COVID-19 and its impact on local, state and federal levels is changing rapidly. This article may not reflect updates to news, executive orders, legislation and regulations made after its publication date. Visit our COVID-19 resource page to find the most current information.