Additional Tax Return Extensions and the 2020 Estimated Tax Payment Postponement Issued by the IRS

Background

On March 18, 2020, the Internal Revenue Service (IRS) issued Notice 2020-17 quickly followed by Notice 2020-18 on March 20, which postponed the due date for 2019 federal income tax returns and 2020 federal income tax estimates from April 15, 2020 until July 15, 2020. 

In addition, The IRS indicated that due to 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, would 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. However, interest, penalties, and additions to tax with respect to the postponed Federal income tax filings and payments will begin to accrue on July 16, 2020.

The postponement of the 1st  quarter estimated tax payment until July 15, 2020 left taxpayers in an unusual position in that their 2nd quarter estimated tax payment was still due on June 15,  2020 (while their 1st quarter estimate was not due until July 15, 2020).

Expansion of the Extension to Other Tax Returns

On April 9, 2020 the IRS issued Notice 2020-23 which expanded the automatic extension relief to additional returns. As a result, the automatic extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020.  Individuals, trusts, estates, corporations and other non-corporate tax filers qualify for the extra time. This means that anyone, including Americans who live and work abroad, can now wait until July 15, 2020 to file their 2019 federal income tax return and pay any tax due.

Individuals that need additional time to file their 2019 tax returns beyond July 15, 2020 can request an extension until October 15, 2020 by filing Form 4868 and paying any taxes due by July 15, 2020.

Correction of the Estimated Tax Payment Glitch

In addition to expanding the automatic extension to file 2019 tax returns, Notice 2020-23 also extends the due date for estimated tax payments due June 15, 2020.  This means that any individual or corporation with a quarterly estimated tax payment due on or after April 1, 2020, and before July 15, 2020, can wait until July 15, 2020 to make that payment, without penalty.  For individuals, this essentially means that they will be paying their 1st and 2nd quarter estimated tax payments at the same time on July 15, 2020.

If you have any questions regarding the changes made by Notice 2020-23, or any other COVID-19 legislation, do not hesitate to contact Mark Di Pietrantonio, or any other member of Schneider Downs & Co., Inc.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

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.

© 2020 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.

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