IRS Gives Taxpayers 90-Day Extension to File Tax Returns and Pay Amounts Due

March 30, 2020

This alert has been updated as of March 30, 2020.

Taxpayers have a 3-month extension to both file their 2019 Federal income tax returns and to pay amounts that would have otherwise been due on April 15, 2020 (including quarterly estimated tax payments). The due date for filing IRS gift and generation-skipping transfer tax returns and making payments of Federal gift and generation-skipping transfer tax on April 15, 2020, is also automatically postponed to July 15, 2020. Below are answers to several common questions regarding this year's tax deadlines.

Can I Delay Paying My Federal Income Tax Liability for 2019?

Yes. All taxpayers can defer payment of their Federal income taxes that would have been due on April 15, 2020, until July 15, 2020. The taxes that can be deferred include Federal income tax and self-employment tax owed for 2019, first quarter estimated taxes for 2020, or a combination thereof. There is no limitation on the amount of tax that can be deferred.

No interest or penalties will be charged for payments made between April 15, 2020, and July 15, 2020, under these rules. Interest and penalties will begin to accrue on July 16, 2020.

Taxpayers who have already filed their 2019 returns and have scheduled a payment of estimated tax for April 15, 2020, will not automatically have their payments deferred until July 15, 2020. They must take active steps to reschedule the payments.

Should I Still File My Federal Income Tax Return by April 15?

If you are expecting a refund with your tax return, then you should still file on time so that you may receive your refund as soon as possible.

However, if you are not expecting a refund, the deadline for filing income tax returns that were due on April 15, 2020, has been postponed to July 15, 2020. The deferral applies to all individual income tax returns, corporate income tax returns, and income tax returns filed by trusts or estates. This relief is automatic; there is no requirement to file for an extension. Taxpayers who cannot file their tax returns by the extended July 15, 2020, date can file for an extension until October 15, 2020, but must pay their tax by July 15, 2020.

Tax returns due on any other date are not deferred. For example, partnership tax returns on Form 1065 and S corporation tax returns on Form 1120-S for calendar year taxpayers were originally due March 16, 2020. The due date for filing these returns is not deferred. Similarly, if an exempt organization is required to file Form 990-T, reporting unrelated business taxable income on April 15, 2020, the due date is deferred until July 15, 2020. However, if the organization’s return was originally due on May 15, 2020, the due date for filing that return is not deferred.

Can I Delay Paying Estimated Taxes?

Yes. IRS Notice 2020-18 clearly states that Federal estimated income tax payments (including payments of tax on self-employment income) that would have been due on April 15, 2020, can be delayed until July 15, 2020. At this time, quarterly estimated tax payments due on June 15, 2020, are still required to be paid on time.

Can I Delay Paying Other Federal Taxes and Filing Other Federal Tax Returns?

Yes. The deadline for filing Form 709 (United States Gift and Generation-Skipping Transfer Tax Return) and making payments of Federal gift and generation-skipping transfer tax due April 15, 2020, is postponed to July 15, 2020. This relief is automatic, meaning there is no requirement to file for an extension. Taxpayers who cannot file their tax returns by July 15, 2020, can file for an extension until October 15, 2020, but must pay their tax by July 15, 2020.

While not an extension for filing tax returns or payment of taxes, employers and self-employed individuals may be able to increase their liquidity through refundable payroll tax credits for qualified sick leave wages and qualified family leave wages under the recently enacted Families First Coronavirus Response Act. See our prior client alert on this issue here. In addition, the recently enacted Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) allows employers and self-employed individuals to defer the payment of certain taxes and provides new tax credits for employers that may reduce the amount of these taxes owed. See our client alert on the tax provisions of the CARES Act here

Can I Delay Paying My State Income Taxes?

Maybe. Changes are being announced on a state-by-state basis.

Missouri and Illinois have both announced that they will mirror the guidance provided by the IRS and delay the due date for paying income taxes and filing income tax returns until July 15, 2020.

A list of announcements by state is available on the AICPA website here.

Can I Delay Paying Other State Taxes?

Maybe. Changes are being announced on a state-by-state basis.

Illinois is providing a 30-day extension to estates with estate tax returns and payments that are due March 16, 2020, through April 15, 2020. Penalties will not accrue on payments made within the 30-day extension, however, interest will continue to accrue during this time.

Illinois is also providing sales tax relief to eating and drinking establishments that incurred a sales tax liability of less than $75,000 in 2019. Qualified taxpayers may defer, without interest or penalties, sales tax liabilities that would have been due for the February, March, and April 2020 reporting periods. However, qualified taxpayers must timely file their sales tax returns for each reporting period by their original due dates, even if they do not make a payment.

For taxpayers taking advantage of the deferral, one-quarter of the accumulated deferred sales tax liability for the February, March, and April periods will be due on each of May 20, June 22, July 20, and August 20 of 2020.

Do I Have Additional Time to Make Contributions to IRAs, Retirement Plans, HSAs and MSAs for 2019?

The deadline for making contributions to IRAs, certain qualified retirement accounts, health savings accounts, and Archer Medical Savings Accounts for 2019 is, generally, the date by which your federal income tax return must be filed. Thus, the date for making such contributions that were originally due on April 15, 2020, is extended to July 15, 2020.

Are Enforcement Actions Delayed?

Yes. On March 25, 2020, the IRS announced that it, generally, will not be issuing liens or levies, forwarding delinquent accounts, or starting new audits until July 15, 2020. However, field revenue officers will continue to pursue high-income non-filers and perform similar activities where warranted. Moreover, Appeals officers will continue to work cases under their jurisdiction.

Further, the IRS announced several changes to benefit taxpayers under existing installment agreements. Starting April 1, 2020, payments under existing installment agreements will be suspended until July 15, 2020. The IRS will not declare a default if a taxpayer fails to make any installment payments between April 1, 2020 and July 15, 2020. However, interest will continue to accrue on any unpaid balance during April 1, 2020, and July 15, 2020.