It’s official, the IRS extends tax returns due April 15, 2020

What a crazy week we’ve had in the tax world. I’ve been trying to stay on top of the developing situation and even I find myself trying to remember what is the most current status of the tax deadlines. Here’s some help if you’re in the same boat.

On the afternoon of Friday, March 20, 2020, the IRS issued their formal notice that postpones the tax deadline of April 15, 2020 until July 15, 2020. The form of this announcement is Notice 2020-18. You can link to the actual document here.

What’s in IRS Notice 2020-18?

The high level summary of IRS Notice 2020-18 is that tax returns and payments due on April 15, 2020, are automatically postponed until July 15, 2020. This relief from the April 15, 2020 deadline only applies to the following items:

• Federal Income Tax Payments (including payments of tax on self-employment income) and
• Federal Income Tax Returns

This extension applies to an Affected Taxpayer’s 2019 taxable year in relation to the tax payments and tax returns due on April 15, 2020. The extension also applies to federal estimated income tax payments due on April 15, 2020 in relation to the Affected Taxpayer’s 2020 taxable year.

What about extended tax returns?

2019 Tax Returns

If you have already extended your 2019 federal tax return that is due on April 15, 2020, then the extension is still in effect and the return is due on October 15, 2020.

2018 Tax Returns

Taxpayers that have a fiscal year might still have an extended 2018 tax return. For example, if your fiscal year ended on June 30, 2019, then your extended corporate return would have an extension to file until April 15, 2020.

Also, individuals are allowed to have a fiscal year end other than December 31; however, this is extremely uncommon. It’s so uncommon that tax software doesn’t even handle these situations very well. I do have a couple of individual clients that have a fiscal year end of June 30 because they are citizens of Australia, which has a June 30 for their citizens. Keeping the US year end in alignment with their normal Australian year end is easier for them but it does make the US tax return more complicated to prepare.

Based on the way IRS Notice 2020-18 is worded in the third paragraph under Section III of the notice, this extension of time to file DOES NOT apply to the extended 2018 tax returns. The extended 2018 tax returns due on April 15, 2020 are STILL due on April 15, 2020 based on the most current notice from the IRS. It’s still possible that the IRS could change this before the April 15th deadline if this impacts enough taxpayers.

What about tax payments under IRS Notice 2020-18?

This IRS Notice 2020-18 explicitly restates and expands upon the relief provided under IRS Notice 2020-17. This notice was issued on March 18, 2020 and it limited the amount of tax payments that could be postponed. The limit of the amount postponed was different for corporations and everyone else. This limit has been removed.

In short, there is currently no limit on the amount of the payments that can be postponed from April 15, 2020 until July 15, 2020 under the IRS Notice 2020-18. This applies to payments for 2019 that would be due on April 15, 2020 and the first quarter estimated tax payments for tax year 2020 that would normally be due on April 15, 2020.

What about state tax returns and payments?

State tax return and payment deadlines are a completely different story. Some states automatically follow the federal deadline so they should automatically have the same extension. Other states will need to take affirmative action to grant this additional extension, either through regulatory action or legislative action. You’ll definitely want to check with your specific state to make sure you get it right.

There are a number of journalist who are tracking this and you can check out their summaries. This post by Kelly Erb is the one I have bookmarked and keep referring to:
https://www.forbes.com/sites/kellyphillipserb/2020/03/12/heres-what-we-know-about-extensions-other-tax-relief-due-to-coronavirus-concerns/#2d24cc993412

One thing to remember in all of this is to take care of you and your family first. Stay safe and follow the government’s instructions as they apply to your location. After that, keep in mind that the tax situation is changing daily so always contact your tax professional before you make any tax decision, whether that is when to file or pay your taxes, or if you have questions about how this impacts other areas of your tax situation.

Other resources:

This Q&A by Kelly Erb has some really good information and explanations:
https://www.forbes.com/sites/kellyphillipserb/2020/03/19/all-you-wanted-to-know-about-the-recent-irs-tax-payment-relief-but-were-afraid-to-ask/#4699a9fe45d5

Ed Zollars also has an great update on the extension with links to more information:
https://www.currentfederaltaxdevelopments.com/blog/2020/3/20/due-date-pushed-back-to-july-15-for-income-tax-returns-due-on-april-15