Yesterday afternoon, the IRS issued Notice 2020-17, which formalized the payment deferral announcement made yesterday by Treasury Secretary Mnuchin. The announcement cleared up many of the questions that were unanswered this week.
The Notice treats any taxpayer that has a federal income tax payment due on April 15, 2020 as an affected taxpayer and therefore is eligible for the relief described below. This applies to income tax balances due for 2019 as well as to first quarter estimated tax payments for 2020, both of which would normally be due on April 15, 2020.
All non-corporate taxpayers, including estates and trusts, will be eligible to defer to July 15, 2020 up to $1 million of payments that would otherwise be due on April 15. There is only one $1 million deferral available for the sum of the income tax due PLUS the first quarter estimated tax payment. The postponed amounts will not accrue any interest or failure to pay penalties during this 90-day period. The $1 million amount is the same regardless of filing status so a married couple filing a joint return will get the same $1 million postponement as a single individual.
Corporate taxpayers will likewise be eligible for a $10 million postponement. The $10 million amount will apply to each group consolidated group or for each C corporation that does not join in filing a consolidated return. This does not apply to an S corporation.
The Notice does not apply to the second quarter 2020 estimated tax payment that will still be due on June 15, 2020.
The Notice points out that no taxes other than income taxes and self-employment taxes due on April 15, 2020 will be covered by this postponement. Therefore, any gift tax, estate tax or other federal tax is still due. In addition, the Notice does NOT provide for automatic extensions of time to file. If your tax return will not be filed by the April 15 due date, you must file an extension request to avoid potential penalties.
In these uncertain times, it is important to reach out to your Citrin Cooperman contact to discuss how this will affect your April 15 obligations.