As part of the Federal government’s emergency assistance to taxpayers during the COVID-2019 pandemic, the Treasury Department and the IRS issued Notice 2020-17 on March 18, 2020 providing payment relief for all taxpayers with Federal income tax payments (including payments of tax on self-employment income) due April 15, 2020. The applicable Federal income tax payments include both 2019 income tax payments due on April 15, 2020 and 2020 estimated tax payments due on April 15, 2020. The postponement date is July 15, 2020 for making Federal income tax payments originally due on April 15, 2020 in an aggregate amount up to the Applicable Postponed Payment Amount (“APPA”).
The APPA is up to $10,000,000 for each consolidated group of C corporations or for each C corporation that does not join in filing a consolidated tax return.
For all other taxpayers, the APPA is up to $1,000,000, regardless of filing status. For example, the APPA is the same ($1,000,000) for a single individual and for married individuals filing a joint return.
The period beginning on April 15, 2020 and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to pay the Federal income taxes postponed by this notice. Interest, penalties and additions to tax will accrue, without any suspension or deferral, on the amount of any Federal income tax payments in excess of the APPA due but not paid by a taxpayer on April 15, 2020.
Please note that, as stated above, the APPA is an aggregate number. For example, if an individual taxpayer were to owe $800,000 on April 15, 2020 attributable to her 2019 income tax return and an 2020 estimated tax payment of $400,000 on April 15, 2020, she would need to submit a payment in the amount of $200,000 to the IRS on or before April 15, 2020 ($1,200,000 total otherwise due on April 15, less the APPA of $1,000,000) in order to avoid applicable penalties and interest.
Also, please note that the date for filing tax returns or information returns was not extended by Notice 2020-17. Therefore, taxpayers should file a tax return or an automatic extension request on or before April 15, 2020, for a tax return due April 15, 2020, even if there is no tax payable on April 15, 2020 because of Notice 2020-17.
If you have questions, please contact your HM&M tax advisor.
For more information check out HM&M’s COVID-19 Resources page.
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