Updated: Deferring Tax Filings and Payments Amid COVID-19 EmergencyPrint PDF
On March 13, 2020, the President of the United States issued an emergency declaration granting the Internal Revenue Service (“IRS”) the authority to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency (the “Emergency Declaration”). Pursuant to the Emergency Declaration, on March 18, 2020 the IRS released Notice 2020-17, in which the IRS offered taxpayers guidance on deferring federal tax payments. On March 20, 2020 the Department of the Treasury followed up with an announcement that the April 15, 2020 filing deadline would also be extended to July 15, 2020 to allow individuals and businesses additional time to file. On March 20, 2020, the IRS released Notice 2020-18 which restates and expands upon the relief provided in Notice 2020-17.
Extension of the April 15th Payment Deadline
The IRS determined that any person with a federal income tax payment due on April 15, 2020 is affected by the COVID-19 emergency and is eligible for relief granted in Notice 2020-18.
- Pursuant to Notice 2020-18, individual and non-corporate tax filers with federal tax payments due on April 15, 2020 (including pass-through entities, trusts and estates) may postpone federal tax payments until July 15, 2020, with no dollar limitation.
- Pursuant to Notice 2020-18, corporate filers (including consolidated groups) may postpone federal tax payments due on April 15, 2020 until July 15, 2020, with no dollar limitation.
- Any tax filers with returns due on March 15 are not afforded relief.
- Calendar year-end tax-exempt organization returns are due on May 15 (four and a half months after the close of the year) and therefore are not afforded relief under Notice 2020-18.
- Estimated taxes for the year ended December 31, 2019 were due prior to April 15 and therefore are not covered.
- Estimated quarterly tax payments for the 2020 tax year due on June 15 for calendar year taxpayers are not covered. Such payments will be due on June 15, prior to the April 15 estimated payments that are postponed to July 15.
- Relief will not be available for many withholding taxes, few of which are due on April 15.
Breadth of Taxes Covered by Notice 2020-17 and Notice 2020-18
The relief granted is available for federal income tax payments (including payments of tax on self-employment income) due on April 15, 2020 with respect to the 2019 taxable year as well as federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020 with respect to the 2020 taxable year.
Calculation of Interest and Penalties
The period beginning on April 15, 2020 and ending on July 15, 2020 will be excluded in any calculation of interest and penalties on federal income tax payments postponed. As such, interest and penalties on such postponed payments will begin to accrue on July 16, 2020.
Extension of the April 15th Filing Deadline
On March 20, 2020, the Department of the Treasury announced via Twitter that all taxpayers and businesses will have additional time to file federal tax returns. The IRS followed up with Notice 2020-18 later that day, which states that the due date for filing federal income tax returns is automatically postponed to July 15, 2020.
The extension of the filing deadline was a welcome relief to tax preparers, given the ongoing disruptions to daily life that are making it challenging for taxpayers to provide the information required to prepare a return or an extension to a return.
Refunds Not Expected to be Affected
The Secretary of the Treasury stated in a press briefing on March 17 that refund issuances will not be affected for those taxpayers who do file and pay their taxes by April 15, 2020. On March 20, 2020 the Secretary of the Treasury encouraged all filers owed a refund to file their returns promptly.
Massachusetts Tax Relief Measures (Updated on March 30, 2020)
On March 27, 2020, Governor Charlie Baker announced with the President of the Senate and the Speaker of the House that Massachusetts will extend the state individual income tax filing and payment deadline from April 15, 2020 to July 15, 2020. This relief is automatic and taxpayers do not need to file any form to qualify. This extension does not apply to corporate filers.
Massachusetts announced administrative tax relief measures on March 18 for businesses impacted by the COVID-19 emergency.
- Massachusetts will postpone the collection of sales tax and meals tax that would otherwise be due in March, April and May until June 20, 2020 for businesses that paid less than $150,000 in sales tax plus meals taxes in the year ended February 29, 2020 and
- Massachusetts will postpone the collection of room occupancy tax that would otherwise be due in March, April and May until June 20, 2020 for Businesses that paid less than $150,000 in room occupancy taxes in the year ended February 29, 2020.
All penalties and interest that would otherwise apply will be waived.
The Massachusetts Department of Revenue announced in a Technical Information Release on March 19 that it will waive any late-file or late-pay penalties for returns and payments due during the period of March 20, 2020 through May 31, 2020 for vendors with meals tax return and payment obligations and operators and intermediaries with room occupancy excise return and payment obligations that do not otherwise qualify for the emergency relief announced on March 18. Returns must be filed and payments must be remitted on or before June 20, 2020. Note that the Technical Information Release provides for a waiver of penalties only and therefore statutory interest will accrue.
We are monitoring the evolving situation and will keep you updated on any future developments.
This advisory was prepared principally by Laura Marsell, a member of Nutter’s Tax Department. If you would like additional information, please contact any member of our Tax Department or your Nutter attorney at 617.439.2000.
This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising.