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Federal Tax Payments Extended 90 Days

By: Jason Carter |

As the world continues to grapple with the COVID-19 pandemic, President Trump’s declaration of a national emergency paved the way for the IRS and Treasury Department to help lessen the impact of economic disruptions caused by the virus by increasing liquidity and relieving taxpayer burdens.  At a press conference held by members of the Coronavirus Task Force on March 17, 2018, Treasury Secretary Steven Mnuchin outlined his plan to add an additional $300 billion of liquidity into the economy through an IRS Payment Deferral Program.  Yesterday, Notice 2020-17 was released which clarifies the plan’s details including the following highlights:

  • All taxpayers with Federal income tax payments due April 15, 2020 are considered an “Affected Taxpayer” for purposes of the notice.
  • Affected Taxpayers receive an automatic 90-day extension of time to make all Federal income tax payments due April 15, 2020 without incurring interest or penalties, subject to the limitations stated below.  These payments are now due on July 15, 2020.
  • Corporations (including consolidated groups) can defer payments up to $10 million.
  • All other Affected Taxpayers can defer payments up to $1 million.  The same limitation applies to single individuals and married individuals who file joint returns.
  • The deferral applies to the total amount of all Federal income tax payments that would be due on April 15, 2020, including:
    • First quarter estimated payments for tax year 2020,
    • Tax payments due upon filing 2019 tax returns (or extensions), and
    • Self-employment income taxes for tax years 2019 and 2020.
  • The Notice does not extend the due date for taxpayers to file tax returns or information returns, nor does it defer the due date for non-income based tax payments.
  • Taxpayers may still request a 6-month extension of time to file their tax return until October 15th.
  • Interest and penalties on deferred payments up to the applicable limitation will begin to accrue on July 16, 2020.  However, interest and penalties for amounts exceeding the applicable limitations will begin to accrue on April 16, 2020.
  • Affected Taxpayers subject to penalties despite the relief granted by the Notice may seek reasonable cause relief under § 6651 for failures to pay tax due with their return.
  • Individuals and certain trusts who are Affected Taxpayers may seek a waiver to a penalty under § 6654 for failure to pay estimated income taxes.  However, waivers are unavailable to Corporations who fail to pay estimated taxes under § 6655.

This deferral program only applies to federal tax payments.  Taxpayers should consult their tax advisors about potential opportunities for relief that may be available from state and local taxing authorities in jurisdictions where they file.

TPC is continuing to monitoring these developments and will provide more information as additional guidance is released.  Please contact a member of your TPC engagement team if you have any questions about this topic or to learn more about how TPC can help.