Additional Guidance from the IRS on the Deferred April 15th Payments

March 19, 2020

The Internal Revenue Service formally provided more information yesterday on the deferred April 15th tax payments in Notice 2020-17. The 2019 tax return filing deadline of April 15th has NOT been extended.

The Notice indicates that all taxpayers are affected by the Coronavirus pandemic and have been granted a 90-day deferral for their April 15th income tax payments that include not only the 2019 tax return balance due, but also the 2020 1st quarter estimated tax payment. This defers tax payments from April 15th until July 15th without being subject to interest and penalties. The 2020 2nd quarter estimate that is due on June 15, 2020 was not addressed.

The following information was provided in the Notice:

  • Individuals, regardless of filing status, can postpone $1,000,000 in aggregate for their April 15th payments that include the 2019 balance due and 2020 1st quarter estimate. The $1,000,000 limit applies to both single filers as well as married individuals filing a joint return.

  • Corporations can defer up to $10,000,000 for each consolidated group of C corporations or for each C corporation that does not file a consolidated return.

Unpaid tax liabilities that are greater than the amounts listed above will begin accruing interest and penalties on April 15th. For example, an individual who has a tax liability of $1.5M originally due on April 15th would have interest and penalties accruing on April 15th if the excess $500K was not paid until July 15th. A taxpayer may or may not be successful in requesting an abatement to have penalties waived due to “reasonable cause.” Interest is typically not abated.

Most states have not addressed whether or not they will conform to the federal rules outlined above.

We will closely monitor any new developments and keep you informed. If you have any questions, please contact your MichaelSilver tax professionals at 847.982.0333.