COVID-19 Response: Tax Update - IRS Filing & Payment Deadlines Postponed Until July 15
Washington, D.C. (March 23, 2020) - Reversing a distinction previously made, the Internal Revenue Service (IRS) on March 21 postponed until July 15 deadlines for both paying and filing federal income taxes normally due April 15. The postponed deadlines cover only federal income tax. However, unlike the postponements announced just days ago, these new guidelines apply regardless of the amounts of federal income tax owed. View the IRS notice about this extension here.
Recently, the IRS postponed the deadline for paying federal income tax up to dollar limitations. However, the IRS had not extended the deadline for actually filing Federal income tax returns normally due April 15. We covered this development in a March 18 alert.
On March 21, the IRS announced that it has automatically extended from April 15 to July 15 the deadlines for both (a) filing federal income tax returns normally due April 15 and (b) paying federal income tax normally due April 15. Taxpayers who by July 15 file returns and pay amounts due will not owe the IRS late-filing or late-payment interest or penalties.
This relief is automatic – taxpayers need not file with the IRS any additional forms or contact the IRS in order to qualify.
Scope of Relief
The postponed deadlines are available to all taxpayers including individuals, trusts and estates, corporations, and other non-corporate tax filers including individuals subject to self-employment tax.
The postponements cover federal income tax normally payable and filed by April 15. These taxes include (a) federal income tax payable for 2019 and (b) estimated federal income tax (including tax on self-employment income) payable for the first quarter of 2020.
No other payment or deposit of any other type of federal tax may be postponed. For example, the IRS has not postponed deadlines for paying or filing estate tax, payroll taxes, and excise taxes.
Example: A business employing workers may be subject to federal employment taxes on IRS Form 941. The IRS has not postponed the deadline for paying or filing employment taxes.
The IRS’ announcement also does not postpone deadlines for paying or filing any taxes payable to any state or the District of Columbia.
Extensions of Time to File Remain Available
Taxpayers who find they cannot file federal income tax returns by July 15 may request automatic extensions of time to file. Individuals may file by July 15 IRS Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return. Corporations may file by July 15 IRS Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns.
As always, however, an extension of a filing deadline does not extend the deadline for paying taxes.
Example: A corporation preparing its federal income tax return for 2019 finds that it needs more time beyond July 15 to complete and file the return. By filing IRS Form 7004 by July 15, the corporation can obtain an extension of its deadline to file. However, in order to avoid IRS interest and penalties the corporation must nevertheless pay its 2019 federal income tax by July 15.
Opportunities to Claim Refunds Continue
The IRS urged taxpayers who are due refunds (rather than owing tax) to file their returns as soon as possible. It stated that most tax refunds are being issued within 21 days.
For more information on these developments, please contact the author of this alert. Lewis Brisbois has formed a COVID-19 Attorney Response Team to help your business with the myriad legal issues arising from the outbreak. Visit our COVID-19 Response Resource Center to find an attorney in your area.
Michael J. Grace, Partner