Final Federal Guidance on April 15, 2020 Automatic Relief (Notice 2020-18)
Portland, Ore. – March 23, 2020
Late Friday, the IRS issued Notice 2020-18, which contains formal guidance relating to the verbal statements from President Trump and Treasury Secretary Mnuchin that the April 15 filing and payment deadlines are being moved to July 15, 2020. This notice completely supersedes the prior guidance in Notice 2020-17 (which you may recall contained payment deferral caps.)
A high-level summary of its important points:
- All 2019 income tax returns that had an original due date of April 15, 2020, are automatically extended to July 15, 2020, without need for filing any type of extension. This applies to individuals, trusts, estates (solely with respect to Form 1041), partnerships & LLCs, associations, or corporations.
- All 2019 income tax payments (including self-employment tax), in any amount (for any taxpayer referenced in the first bullet) otherwise due on April 15, 2020, are not due until July 15, 2020. The limits on the amount of tax that could be deferred under Notice 2020-17 are completely eliminated by this updated guidance.
- The new notice specifies that 2020 first quarter estimated tax payments otherwise due April 15, 2020, are now not payable until July 15, 2020.
- The new notice specifies that 2020 second quarter estimated tax payments due June 15, 2020, are NOT eligible for payment deferral, and so remain payable as of June 15, 2020, absent future relief.
- Any other payments, other than federal income tax or self-employment tax, due April 15, 2020, are NOT eligible for any payment deferral relief under this notice. For example, estate (Form 706 related) or gift taxes or payroll taxes, otherwise due on April 15, 2020 (or any other date) are not subject to relief under this notice.
- For any income tax return or income tax payment eligible for relief under the notice, there will be no interest or penalty charge for the period April 15, 2020, to July 15, 2020.
One item that is unclear in Notice 2020-18 is the treatment of fiscal year returns that may have been extended to, and are due on, April 15, 2020 (e.g. a corporation with a fiscal year ending 6/30/19.) While the notice initially states that it applies to any income tax return due April 15, 2020, it then goes on to state that the relief is further limited to any taxpayer’s “2019 taxable year.” Since the fiscal year returns are filed on 2018 forms, the IRS may interpret the notice as being inapplicable to fiscal years filed on 2018 forms. Absent clarification from the IRS before April 15, the safe approach would be to file these returns by April 15, 2020. Please consult with your tax advisor if you are affected by this scenario.
Oregon and Portland/Multnomah County:
At this writing, we are still waiting for Oregon to formally confirm that they will follow the automatic federal extension for both returns and payments for all affected taxpayers. We have received informal advice from Portland/Multnomah County that they intend to follow whatever Oregon does.
With respect to the new corporate activity tax for Oregon, the initial estimated tax payment is due April 30, 2020. The Oregon Department of Revenue so far has advised that the payment obligation will not be deferred (because of coronavirus factors) but stated in informal web guidance if the taxpayer makes a “good faith effort” to estimate the payment due and makes such estimated payment timely, the taxpayer will not be penalized. Unfortunately, this leaves it up to the Oregon Department of Revenue to determine whether a good faith effort was made – hopefully, they would be lenient under these circumstances.
Director of Tax
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