All You Wanted To Know About The Recent IRS Tax Payment Relief But Were Afraid To Ask

As COVID-19 continues to impact the United States, the federal government is taking action to ease the burden on taxpayers. Most recently, the Internal Revenue Service (IRS) has announced that the due date for making tax payments has been pushed to July 15, 2020.

The payment relief (you can read those initial details here) raised more questions. To help, here are a few questions and answers.

When is the tax filing deadline for individual federal income tax returns? The filing deadline for tax returns remains April 15, 2020. 

What if I can’t file by the deadline? If you need more time to file your federal income tax return, consider filing for an extension.

What if I am expecting a refund? Refunds are not affected. The IRS urges taxpayers who are owed a refund to file as quickly as possible. 

When is my tax payment due? Income tax payment deadlines for individual returns are being automatically extended until July 15, 2020, for up to $1 million of their 2019 tax due. This payment relief applies to all individual returns.

What about self-employment tax? The relief applies to self-employed individuals. 

What about estimated tax payments? The relief also includes estimated tax payments for the tax year 2020 that are due on April 15, 2020. Please note that there is a second estimated tax payment due during the deferral – the one due June 15, 2020 – but the IRS has not indicated that amount is eligible for deferral. The Notice and subsequent guidance specifically reference estimated payments “that are due on April 15, 2020.”

What about trusts and estates? Yes, the relief applies to payments due from trust and estates.

What about corporations? Payment deadlines are automatically extended for C corporations, too, until July 15, 2020. Those corporations may delay up to $10 million of their 2019 tax due.

So how does this work? If you file your tax return or request an extension of time to file by April 15, 2020, you will automatically avoid interest and penalties on the taxes paid by July 15, 2020. Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. 

Do I have to do anything to qualify for the relief? No, IRS will automatically provide the relief. You don’t need to file any additional forms or call the IRS to be eligible.

What about state tax or other federal tax payments? The relief outlined in the Notice only applies to federal income tax payments which would have been due on April 15, 2020. It does not apply to state tax payments or deposits or payments of any other type of federal tax, like excise taxes. Some states and local tax authorities are also offering tax relief. For a continually updated list, click here.

What’s the point of deferring payments but not filing dates? Taxpayers and tax professionals alike are unhappy that the due date wasn’t pushed forward. The idea was to allow taxpayers to hold onto cash for a little longer in a tight economy. However, with offices, businesses and schools shut down, that puts a burden on the tax profession – and taxpayers. The American Institute of CPAs’ (AICPA) president and CEO, Barry Melancon, CPA, issued a strongly worded statement, noting that “it is impossible for every taxpayer and their tax adviser to prepare returns in this environment.” Stay tuned.

Not that I don’t trust you, but where can I find this in writing from the IRS? You can read the official IRS guidance here (downloads as a PDF).