IRS Provides Extension for Federal Income Tax Payments Due April 15

The IRS has provided tax payment relief for taxpayers with a federal income tax payment due April 15. The due date for making federal income tax payments that are normally due April 15, 2020 is postponed to July 15, 2020.

For C corporations and consolidated corporate groups required to make federal income tax payments by April 15, 2020, an aggregate amount up to $10,000,000 is postponed to July 15, 2020.

For individuals, trusts and estates required to make federal income tax payments by April 15, 2020, an amount up to $1,000,000 is postponed to July 15, 2020 regardless of filing status. For example, the postponed payment amount is the same for a single individual and for married individuals filing a joint return.

The tax payment postponement is only for federal income tax payments for 2019 normally due on April 15, 2020 and federal estimated income tax payments (including estimated payments on self-employment income) due on April 15, 2020 for the 2020 tax year. Income tax returns and state tax payments are also required in 42 states and the District of Columbia. State filing and payment deadlines vary and are not always the same as the federal filing deadline. This tax payment relief does not apply to state payment deadlines.

The IRS has not provided a payment extension for the payment or deposit of any other type of federal tax (including payroll taxes and excise taxes) or for the filing of any tax return or information return.

As a result of this postponement, the period beginning on April 15, 2020 and ending on July 15, 2020 will be disregarded in the calculation of any interest, penalty or addition to tax for failure to pay the federal income taxes postponed by this notice. Interest, penalties and additions to tax with respect to such postponed federal income tax payments will begin to accrue on July 16, 2020.

In addition, interest, penalties and additions to tax will accrue, without any suspension or deferral, on the amount of any federal income tax payments in excess of the postponed amount due but not paid by a taxpayer on April 15, 2020.

Please note that the tax payment relief does not provide any filing date extensions. Applications for extensions of time to file your tax return including a calculation of a good faith estimated tax amount will need to be filed by April 15, 2020. On Thursday, March 19, 2020, legislation was introduced in the U.S. Senate that would extend the tax filing date to July 15. The bill would create consistency in tax filing and tax payment dates, and would be a legislative solution to the problem caused when the IRS and the Treasury Department extended only the tax payment date. We will monitor the progress of this legislation and update you accordingly.

If you have any questions, please contact your Melton & Melton team member for additional guidance.