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BHBM Tax Law Alert | Unlimited Tax Deferral for Affected Taxpayers


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FEDERAL TAX LAW UPDATE

IRS Allows Unlimited Tax Deferral for Affected Taxpayers

On March 20, 2020, the Treasury Department released additional guidance in the form of Notice 2020-18 (the “Notice“). The Notice expands and supersedes the previous guidance provided in Notice 2020-17 (the “Prior Guidance“). The Notice provides that the Secretary of the Treasury has determined that any person with a federal income tax payment or a federal income tax return due April 15, 2020, is affected by the COVID-19 pandemic for purposes of the relief described in the Notice (the “Affected Taxpayers“). For purposes of the Notice, the term “person” includes an individual, a trust, estate, partnership, association, company or corporation, as provided in IRC § 7701(a)(1).

For Affected Taxpayers, the due date for filing federal income tax returns and making federal income tax payments due April 15, 2020, is automatically postponed to July 15, 2020. Moreover, Affected Taxpayers do not have to file Forms 4868 or 7004.

The Prior Guidance limited the amount of federal income tax payments that could be deferred by Affected Taxpayers. However, the Notice provides that there is no limitation on the amount of federal income tax payments that may be deferred by Affected Taxpayers.

The Notice provides that the relief granted in the Notice is available solely with respect to federal income tax payments (including payments of tax on self-employment income) and federal income tax returns due on April 15, 2020, with respect to Affected Taxpayers’ 2019 taxable year, and federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for Affected Taxpayers’ 2020 taxable year.

The Notice does not provide an extension for the payment or deposit of any other type of federal tax or for the filing of any federal information return. As a result of the postponement of the due date for filing federal income tax returns and making federal income tax payments from April 15, 2020 to July 15, 2020, the period beginning on April 15, 2020 and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file the federal income tax returns or to pay the federal income taxes postponed by the Notice. Any applicable interest, penalties, and additions to tax with respect to such postponed federal income tax filings and payments will begin to accrue on July 16, 2020.

Please find a full copy of the Notice here.

To view all of our COVID-19 related Tax Law Alerts, click here.


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The information contained within this newsletter does not constitute legal advice and is not intended to create an attorney-client relationship. You should consult an attorney for individual advice regarding your own particular situation.


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