On Wednesday, the IRS finally issued a notice describing the tax relief relating to the novel coronavirus outbreak currently affecting the country. The IRS is pushing back the deadline for various tax payments but did not provide relief from the April 15 filing deadline for tax or information returns.
Notice 2020-17 provides that any taxpayer with a federal tax payment due on April 15, 2020, now has until July 15, 2020, to make that payment. C corporations and consolidated groups can postpone up to $10 million in tax payments under this relief. All other taxpayers can postpone up to $1 million in tax payments. (The $1 million limit applies to both individuals and married taxpayers filing joint returns.)
The postponement is available for federal income taxes (including self-employment tax) due on April 15 for the 2019 tax year and to estimated income tax payments due on April 15 for the 2020 tax year.
The postponement means that the period from April 15, 2020, through July 15, 2020, will be disregarded by the IRS for purposes of calculating any interest, penalty, or addition to tax for failure to pay federal income taxes postponed by the notice. Interest, penalties, and additions to tax will accrue during that period on any amount of tax not paid by April 15 on amounts over the above-stated $1 million and $10 million limits.
The relief comes five days after President Donald Trump declared the coronavirus outbreak to be a national emergency, which triggered authorization under Sec. 7508A for the IRS to provide relief to taxpayers.
Taxpayers who qualify for this relief who are nonetheless subject to penalties or additions to tax may seek reasonable-cause relief under Sec. 6651 for a failure to pay tax or seek a waiver to a penalty under Sec. 6654 for a failure by an individual or certain trusts and estates to pay estimated income tax. Corporate taxpayers or tax-exempt organizations are not permitted that relief under Sec. 6655.
While the AICPA welcomed the fact that official guidance has been released, it decried the IRS’s failure to postpone the April 15 and possibly other filing deadlines.
AICPA President and CEO Barry Melancon, CPA, CGMA, said in a prepared statement: “The concern and confusion related to coronavirus is causing cities across the country to shut businesses down, and Treasury’s recent decisions do not reflect the real-world difficulties tax practitioners and their clients are experiencing.” He added, “The AICPA understands the need for economic stimulus, but it is impossible for every taxpayer and their tax adviser to prepare returns in this environment. Treasury must act immediately by extending the April 15th filing deadline and providing more clarity on the details of recent relief actions.”
Edward Karl, CPA, AICPA vice president–Tax Policy & Advocacy, noted that, “In the past when the IRS has provided relief for a disaster, it has typically offered payment and filing relief together. It is very surprising that the IRS has not granted filing relief, given the severity of the coronavirus pandemic’s impact on our nation.”
For more news and reporting on the coronavirus and how management accountants can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page.
— Sally P. Schreiber, J.D., (Sally.Schreiber@aicpa-cima.com) is a Tax Adviser senior editor.