Earlier today, the IRS issued Notice 2020-17 that provides specific guidance and clarifies statements previously made by Treasury Secretary Steve Mnuchin regarding the deferral of tax payments that would ordinarily be due on April 15. The payment deferral provisions are part of the Trump administration’s efforts to alleviate the impact of the coronavirus pandemic on the U.S. economy.
In accordance with this guidance, any taxpayer with a federal income tax return payment due on April 15, 2020, can postpone that payment until July 15, 2020. The deferral provisions apply to both 2019 federal income tax payments and 2020 federal estimated income tax payments that are due on April 15, 2020.
The maximum payment amounts that may be postponed are $1 million for individuals and $10 million for Subchapter C corporations. A single $10 million limitation applies to an affiliated group of Subchapter C corporations filing a consolidated income tax return. Similarly, married taxpayers filing a joint return are allowed a single $1 million limitation. The limitations apply to the aggregate amount of 2019 income tax and 2020 estimated tax payments.
Payments made by July 15, 2020, will not be subject to interest or penalties. Generally, penalties and interest on postponed payments will begin to accrue on July 16, 2020. However, penalties and interest on any amounts in excess of the previously mentioned limitations will begin to accrue on April 15, 2020.
Notice 2020-17 does not delay the original April 15 due date for filing federal income tax returns. However, both individual and corporate taxpayers that submit a valid automatic extension of time to file their 2019 federal income tax returns will be eligible for the payment deferral.
Additional coronavirus relief provisions are expected in the near future. Whitley Penn is monitoring the situation and will issue additional tax alerts as new developments occur. In the interim, please contact your Whitley Penn Tax Advisor if you have any questions or require any additional information.