IRS Formalizes Federal Income Tax Relief and Delayed Tax Payment Deadline

The IRS released Notice 2020-17 on March 18, 2020, formalizing the relief announced the previous day by U.S. Treasury Secretary Steven Mnuchin (discussed in a March 17 alert, available here), which extended the time to pay certain taxes by 90 days. Consistent with Secretary Mnuchin’s announcement yesterday, the Notice does not extend the due date for filing any return.

The Notice extends to all persons with a federal income tax payment due April 15, 2020. For such persons, the due date for making federal income tax payments ordinarily due on or before April 15, up to a specified amount, is postponed to July 15, 2020. That amount is up to $10,000,000 for each consolidated corporate group or each C corporation not filing a consolidated return. For all other taxpayers, that amount is up to $1,000,000, regardless of filing status. Thus, both a single individual and married individuals filing a joint return are able to defer up to the same $1,000,000 amount.

The relief set forth in the Notice is available solely with respect to (i) federal income tax payments, including payments of tax on self-employment income, due on April 15, 2020, for a taxpayer’s 2019 taxable year, and (ii) federal estimated income tax payments, including payments of tax on self-employment income, due on April 15, 2020, for a taxpayer’s 2020 taxable year. The relevant $1,000,000 or $10,000,000 cap on deferrable payments applies to the aggregate of the amounts in (i) and (ii).

The Notice is clear that it provides no extension for payment or deposit of any other type of federal tax or for the filing of any tax or information return.

For tax payments deferred in accordance with the Notice, interest, penalties, and additions to tax for failure to pay will be disregarded by the IRS. Such interest, penalties, and additions to tax will begin to accrue on July 16, 2020, unless the tax due is paid on or before July 15, 2020.  Interest, penalties, and additions to tax will begin to accrue on April 15, 2020, with respect to any amounts of Federal income tax due exceeding $1,000,000 (or $10,000,000 for corporations and consolidated groups).