Payment Deadline Extension Details

We released a Tax Alert earlier this week informing you that the U.S. Treasury had extended the payment date for 2019 taxes originally due April 15, 2020 to July 15, 2020. The original Tax Alert published this week shared that an extension applies to individual tax liabilities up to $1 million and corporation tax liabilities up to $10 million.

The IRS has recently released Notice 2020-18 clarifying some important aspects of this payment extension:

  • There is no limitation on the tax liability amount that may be deferred. the $1 million and $10 million caps have been removed.
  • The automatic extension to pay applies to any “person” with a federal income tax payment due April 15, 2020. “Person” includes individuals, trusts, estates, partnerships, associations, companies and corporations .
  • The relief is provided for April 15, 2020 tax due for the 2019 tax year and also for Q1 estimated tax due for 2020 tax year.

Other important items to note regarding the payment due date extension:

  • The extension currently only applies to federal income tax (including tax on self-employment income) – not payroll or other federal taxes.
  • The extension does not specifically include installment payments for IRC Section 965(h) transition liability arising from tax years 2017 and 2018 will be covered by the extension. Those payments should still be made by April 15, 2020 to avoid interest and penalties. We are monitoring this situation closely to see if this changes based on the fluidity of the situation we are in.

Filing Deadline Extension

Additionally, U.S. treasury just announced that the filing deadline of April 15 has been automatically extended to July 15, 2020 for all taxpayers. Taxpayers do not have to file their returns or extensions by April 15, 2020 and can instead file by July 15, 2020 without incurring late filing penalties. Taxpayers do not need to file Forms 4868 or 7004 by April 15, 2020 to receive the extension of time to file and pay.

Similarly, California has automatically extended the filing and payment deadline for all individuals and business entities from April 15, 2020 to July 15, 2020. This California extension covers:

  • 2019 tax returns
  • 2019 tax return payments
  • 2020 1st and 2nd quarter estimated payments
  • 2020 LLC taxes and fees
  • 2020 non-wage withholding payment

If you have any questions regarding the updated payment and filing deadlines or its impact on your business, please contact GHJ’ tax advisors.