As previously discussed, the IRS recently extended the deadline for filing income taxes from April 15 to July 15 in an effort to provide relief to taxpayers. The 90-day extension will have a significant impact on Pennsylvania Corporate Net Income (CNIT) taxpayers.
Currently, the Pennsylvania Department of Revenue (Department) has only announced that the deadline has been moved for the state’s individual income taxpayers and has remained silent on whether the extension also applies to CNIT taxpayers.
The federal deadline being extended may in itself initiate changes to Pennsylvania’s CNIT group, since the state deadline is tied to the federal individual income tax deadline by Pennsylvania law. For example, IRS Notice 2020-18 states that corporations are included in the definition of “person,” to which the extension of the federal tax deadline would presumably be applicable, and Pennsylvania Section 403(a)(1)(ii) of the Tax Reform Code of 1971 states that the PA CNIT is due “… on or before 30 days after the return to the federal government is due …” Since the language in the statute expressly ties the Pennsylvania CNIT deadline to the federal deadline, by operation of law – and regardless of guidance from the Department – it’s likely the PA CNIT deadline will be extended to August 15. Stay tuned.
As with the filing date, the Pennsylvania CNIT payment deadline is also likely extended to August 15 by operation of law pursuant to the extension of the federal deadline, since Section 403(a)(1)(ii) applies to both the filing date and the payment date of Pennsylvania CNIT. It’s currently unclear whether penalties or interest would accrue due to the extension, but if Pennsylvania CNIT receives similar treatment to the state’s Personal Income Tax, no penalties or interest will accrue, based on prior guidance from the Department.
Estimated Payments for 2020
The federal extension would likely have no impact on current due dates of estimated tax payments for Pennsylvania CNIT, since Pennsylvania tax laws pertaining to due dates are not tied to the federal code. PA HB 1232, approved by the state legislature and signed into law by Governor Wolf, allows the Department to extend estimated payment deadlines for Pennsylvania Personal Income Tax, but lacks language that would give the Department express authority to change estimated tax deadlines for CNIT taxpayers.
Our tax advisors will continue to monitor state legislation that affects CNIT taxpayers. If you have questions about how the extended tax deadline affects your Pennsylvania CNIT, contact Schneider Downs.
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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.