Following comments by Treasury Secretary Mnuchin on March 17, 2020, the IRS, in Notice 2020-17, officially extended the due date of certain income tax payments that would normally be due on April 15, 2020. Exercising its powers to extend deadlines in the event of a federal disaster, the IRS announced that taxpayers can postpone payment of federal income taxes that would otherwise be due on April 15 until July 15, 2020, without interest, penalties, or additions to taxes. This extension, however, does not apply to any other type of federal tax or to the filing of tax or information returns. Thus, filings due on April 15, 2020, will not be automatically extended absent the filing of an extension request.

Notice 2020-17 caps deferred payments at $1 million per individual taxpayer regardless of filing status (i.e., the $1 million cap applies to both single individuals and to married individuals filing a joint return). The relief applies to all individual returns, including those filed by self-employed individuals, and to all entities other than C corporations, such as trusts or estates. Postponed payments are capped at $10 million for C corporations and for consolidated groups under Treas. Reg. Section 1.1502-1. Interest, penalties, and additions to tax will accrue starting on April 15 on any federal income tax payment that exceeds the $1 million or $10 million cap.

The relief is only available for federal income tax payments for the 2019 tax year due on April 15, 2020, and for federal estimated income tax payments for the 2020 tax year (including tax on self-employment income).

Implications

The Notice extending payment due dates for certain taxes due on April 15 is welcome news. Although the guidance specifically mentions corporations and individuals, it does, by definition, include all types of taxpayers that have income tax liabilities due on April 15, such as trusts and estates.

Some questions remain, such as:

• Are installment payments for IRC Section 965(h) transition tax liability arising from tax years 2017 and 2018 included in the extended due date?
• Why did the IRS exclude taxpayers with payments falling on a due date other than April 15, such as fiscal-year filers with payments due on May 15?
• Where there are multiple separate consolidated/affiliated groups or separate corporations with common ownership does the $10 million cap apply to each consolidated/affiliated group or only once per controlled group?

Taxpayers and practitioners alike are hopeful that the IRS will issue clarifying guidance in the near future.

The guidance does not provide extended due dates for filing. Failure to timely file a return or request for an extension to file may result in penalties. The absence of relief that would extend filing dates may be burdensome to taxpayers, many of whom are working from home. Furthermore, Notice 2020-17 only applies to certain federal tax payment deadlines and does not control state tax obligations. Taxpayers should seek consultation as to any potential tax relief being offered by state or local tax authorities.

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