Articles

IRS Extends Federal Tax Filing, Payment Deadlines to July 15 by Steven G. Messing, JD, CPA

Posted on March 24, 2020

In response to COVID-19 and its impact on U.S. taxpayers, the IRS officially postponed the 2019 federal income tax filing and payment deadlines from April 15, 2020, to July 15, 2020.

These automatic filing and payment extensions apply to all individual taxpayers (including the self-employed), trusts and estates, C corporations, partnerships, limited liability companies (LLCs) and other non-corporate entities that typically have an April 15 federal tax deadline. The additional 90 days gives taxpayers more time to gather relevant documents, meet with their tax advisors, file their returns and pay any related federal income tax liabilities for 2019. Taxpayers needing extra time to file may request an extension to October 15, but this will not extend the deadline to pay related tax liabilities; interest and penalties on unpaid, deferred amounts will begin to accrue on July 16, 2020.

This federal income tax payment relief also applies to taxpayers’ 2020 first quarter (Q1) estimated tax payments. However, while Q1 payments are deferred until July 15, second quarter (Q2) estimated tax payments are due on June 15. In determining the amount of their Q2 estimated payments, taxpayers can pay the lesser of 110 percent of the taxes they paid in 2019 or 90 percent of their estimated tax liabilities for 2020. Taxpayers who assume their 2020 tax bill will be lower than their tax liabilities in 2019 should be prepared to estimate their 2020 tax prior to June 15, 2020.

It is important to note that under the IRS’s most recent guidance, there are no longer any limits to the federal tax payment amounts that qualify for penalty- and interest-free deferral. In addition, taxpayers should take the time to determine if tax filing and payment relief also are available on the state and local level where they live and where their businesses are located. Many states have already postponed their income tax filing and payment deadlines to meet the July 15 federal deadlines. However, not all states or state-level tax liabilities are delayed.

What Should Taxpayers Do?

If you expect a tax refund, you should try to file as early as possible to expedite receipt of the money due to you. According to the IRS, 63 million Americans who already filed their federal tax returns for 2019 have either received or expect to receive refunds.

If you expect to owe money to the federal government, you may choose to use the extra time to your advantage. Regardless of whether you file your tax returns by the April deadline or wait until July 15, you still have the ability to defer payment and enjoy the benefit of an interest-free 90-day loan from the IRS.

Government response to the COVID-19 pandemic is a rapidly changing situation for which we will keep you updated as the various proposals and provisions of relief are signed into law. If you need any guidance, please don’t hesitate to contact us.

About the Author: Steve Messing, JD, CPA, is a senior tax director with Berkowitz Pollack Brant’s Real Estate Tax Services practice, where he provides business and tax advisory services to nationally recognized real estate partnerships, developers and landholders. He can be reached in the CPA firm’s Miami office at (305) 379-7000 or info@bpbcpa.com.