In response to the Department of Treasury’s decision to move the tax filing deadline to July 15, 2020, the Internal Revenue Service (IRS) issued Notice 2020-18, providing guidance on the federal filing and payment extension.

Notice 2020-18 supersedes Notice 2020-17, which was also released last week as a result of the 90-day tax payment deferral announcement. Here are key common questions to consider:

What does this mean for me or my business?

The tax return of any individual, corporation, trust and estate with a federal income tax payment or tax return due on April 15, 2020, is automatically postponed to July 15, 2020. The extension does not apply to federal income tax returns and payments due on any other dates. For example, partnerships and S corporations whose returns were required to be filed on March 16, 2020 were not postponed. In addition, the extension does not apply for filing payroll, excise or any other information return even if due on or before April 15, 2020.

At this time, businesses and other entities with filing due dates on May 15, June 15 or any other date have not been granted an extension. This includes tax-exempt organizations required to file a Form 990-T in May.

The extension also allows you to continue making contributions to your individual retirement accounts, health savings account and medical savings account until July 15, 2020 for the 2019 tax year.

Do I have to file any forms to receive the extension?

Taxpayers will not have to file Forms 4868 or 7004, which is usually required for extensions. If you need more time to file your tax return beyond July 15, 2020, you can request an additional extension by filing Forms 4868 or 7004 on or before the July 15 due date, which will extend your tax return filing deadline to October 15, 2020. Payments will still be due on or before July 15, 2020, with interest and penalties beginning to accrue at this time.

Is there a limitation on the tax payments that can be postponed?

There is no limitation on the tax payment amounts that can be postponed. However, the relief provided is specifically for federal income tax payments (including payments of tax on self-employment income) and federal income tax returns due on April 15, 2020, as well as federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020. If you already have automatic payments scheduled and would like to cancel them, you must cancel them directly through the IRS Direct Pay, the Electronic Federal Tax Payment System or with your financial institution authorized to electronically fund the withdrawal.

No extension is provided for the payment or deposit of any other type of federal tax, or for the filing of any federal information return.

How have taxes been impacted at the state level?

Some states have acknowledged the impact Coronavirus (COVID-19) has had on businesses within their regions. Here’s how Michigan and Texas have responded to date:

  • Michigan – The Michigan Department of Treasury has yet to acquiesce to the federal extension of time to file and remit payment for tax returns due April 15, 2020. We hope that they will in short order, especially considering the three-week, statewide shelter-in-place order announced on March 23, 2020.
  • Texas: Taxes due based on sales made in February and collected by businesses on behalf of the state and local governments in February were still expected to be paid by the March 20 due date. This includes state and local sales taxes, hotel taxes, mixed beverage gross receipts and sales taxes, motor vehicle rental tax, seller-financed motor vehicle sales tax and motor fuels taxes.

Commonly asked questions and answers related to these filing and payment deadlines can be found on the IRS’ website. For more information or to seek support from a Doeren Mayhew tax advisor, contact us today.