|In response to the Coronavirus, the Treasury has issued a mandate that will allow an extension for Federal Tax Return Payments by moving the payment deadline from April 15th, 2020 to July 15, 2020. The IRS is encouraging most taxpayers to file by April 15th if they will receive a refund, but the taxpayers that owe Federal Tax Payments (known as “Affected Taxpayers”) are now able to postpone payment to the new deadline of July 15, 2020__________________________________________________
The Notice states “For an Affected Taxpayer, the due date for making Federal income tax payments due April 15, 2020, in an aggregate amount up to the Applicable Postponed Payment Amount, is postponed to July 15, 2020. The Applicable Postponed Payment Amount is up to $10,000,000 for each consolidated group (as defined in §1.1502-1) or for each “C” Corporation that does not join in filing a consolidated return. For all other Affected Taxpayers, the Applicable Postponed Payment Amount is up to $1,000,000 regardless of filing status. For example, the Applicable Postponed Payment Amount is the same for a single individual and for married individuals filing a joint return. In both instances the Applicable Postponed Payment Amount is up to $1,000,000.”_______________________
These payments up to $10 million for corporations within the guidelines, and $1 million for other taxpayers will not run interest or penalties between now and July 15th. However, if the corporations or individuals exceed the time limit for payment, they will run interest and penalties on any amount in excess of the $10 million/$1 million limitations from April 15th.”_____________________________________
All Affected Taxpayers are also considered to be “persons” for tax purposes as well. According to Internal Revenue Code Sec. 7701 (a), “The term “person” shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.” This indicates that the as far as the tax payment extension applies, Forms 1040s, 1041s, 1120s and other tax forms included in the above are qualified to receive the payment extensions._____________
Simply put, Affected Taxpayers will automatically avoid interest and penalties on the federal taxes that are paid by July 15. It should be noted that this relief includes federal estimated tax payments due on April 15, 2020, but that any state payments should be reviewed against individual state guidelines as states set individual procedures at this time.
As always, seek professional guidance with respect to any tax matter. Kindly contact us if you have any questions.