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The uncertainty surrounding some key tax relief issues revealed by Treasury Secretary Steven Mnuchin yesterday have been addressed with official guidance from the Internal Revenue Service today.

Key facts:

  • The due date to file income tax returns and/or extension requests remains April 15, 2020.
  • The 90-day penalty and interest free window to pay a tax liability remains in effect for:
    • Individual (and other noncorporate) taxpayers with a tax liability under $1 million
    • Corporate taxpayers with a tax liability under $10 million
  • The 90-day payment extension results in all tax payments due July 15, 2020.
  • Taxpayers with quarterly estimated tax requirements have also been granted a 90-day penalty free extension for Q1 2020. The new payment date for Q1 estimated taxes is now July 15, 2020.
  • Any amounts in excess of the $1,000,000 / $10,000,0000 amounts listed above will attract interest and penalties under existing rules from April 16, 2020 until paid.
  • Any amounts postponed under this relief which are not paid by July 15, 2020 will attract interest and penalties under existing rules from July 16, 2020 until paid.

WG Comment: Interestingly, the relief leaves the due dates for filing a tax return and/or extension request unchanged. Therefore, even if no payment is being made on April 15, 2020 due to the relief above, it appears that an applicable tax return extension form (Form 7004 for most businesses and Form 4868 for individuals) still needs to be filed by April 15, 2020. In addition, it appears that a completed tax return showing a balance due could be filed by April 15, 2020 and the related tax payment could be postponed based on the above relief.

This is the first formal IRS announcement of relief related to the emerging Covid-19 Pandemic. It is likely in the weeks to come additional guidance will be released from the IRS.

We expect that state tax authorities will release similar guidance in the near future. We will continue to post updates to each state here.