Legal Alert

IRS Announces Extension of Payment Deadlines, But Not Filing Deadlines; Several Unanswered Federal and State Tax Questions Remain

March 19, 2020

As a result of the ongoing coronavirus disease (COVID-19) pandemic, the IRS granted taxpayers a limited extension to pay income taxes that are due on April 15, but there is no extension of the April 15 filing deadline. Tax practitioners are urging Treasury and the IRS to provide additional relief, including extensions for filing income tax returns.

On Wednesday, March 18, 2020, the IRS released Notice 2020-17, providing details regarding the much-anticipated plan to offer relief to taxpayers affected by COVID-19. The Notice allows taxpayers who owe 2019 income tax and self-employment taxes as well as first quarter 2020 estimated taxes that are due on April 15, 2020, to make such payments on or before July 15, 2020, without incurring interest or penalties.  The limited extension applies only to payments of up to $10 million for each consolidated group or for each corporation that does not file in consolidation and up to $1 million for all other filers. Importantly, however, the Notice does not extend the April 15, 2020, deadline for filing Federal income tax returns.

There is no extension for payment of any other type of Federal tax, such as estate, excise, or payroll taxes.  Also, there is no relief for taxes other than Federal income taxes due on April 15, 2020; thus, for example, there is no relief for S corporation built-in gains tax payments that were due on March 15, 2020. Under current guidance, there is no extension for estimated tax payments due on June 15, 2020. As a result, currently, those payments interestingly are due before payments originally due on April 15, 2020.

Individual taxpayers who are not able to meet the April 15, 2020, tax filing deadline should file IRS Form 4868 to request an automatic six-month filing extension in order to avoid late filing penalties.

Some states, including Maryland and Colorado, have conformed or indicated that they may conform their payment deadlines to the new IRS guidance. California extended both payment and filing deadlines prior to the Notice and may further extend its June 15 deadline in light of the longer federal relief period. Other states, including Arizona, Delaware, Georgia, Minnesota, Nevada, New Jersey, New York, Pennsylvania, South Dakota, Utah, and Washington, D.C., have yet to issue guidance in response to the Notice. In these states, taxpayers should assume that tax returns and tax payments remain due by April 15. We will monitor the actions taken by various states.

For any questions regarding this alert or other tax issues related to COVID-19, please contact any member of the Ballard Spahr LLP Tax Group.

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This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.

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