Treasury Department Expands Tax Payment Extension to Include 2020 First Quarter Payments

Yesterday, ATKG shared news of the US Department of Treasury’s plans to extend tax payments due by the April 15th tax deadline by 90 days for most individuals and businesses. At the time of that announcement, there had not yet been clarification on whether this extension applied to only 2019 tax liabilities or if it also covered tax liabilities for the first quarter of 2020. 

2020 First Quarter Tax Extension

Late yesterday afternoon, IRS Notice 2020-17 was released, which clarified the postponement applies to both federal income tax payments (including self-employment tax) for the 2019 tax year and to estimated income tax payments for the 2020 tax year due by April 15th.

How Much Can Be Deferred?

C corporations and consolidated groups can defer up to $10 million of tax. All other taxpayers can defer up to $1 million of tax regardless of filing status. For example, a single individual and married taxpayers filing jointly are subject to the same $1 million limitation. A taxpayer is limited to a $1 million (or $10 million) deferral for all income tax liabilities due April 15th; in other words, the limitation applies to the aggregate of a taxpayer’s remaining 2019 tax liability and the tax liability for the 1st quarter of 2020.

Filings Still Due By April 15th

At this time, the extension granted by IRS Notice 2020-17 is only an extension of time to pay; it is not an extension of time to file income tax returns due by April 15th

Families First Coronavirus Response Act

In related news, President Trump signed into law the “Families First Coronavirus Response Act,” which provides emergency paid leave and free coronavirus testing. Under the Act, many employees would receive paid sick leave as well as paid family and medical leave, and employers would receive tax credits to offset this expense. The Act also expands unemployment benefits and provides grants to states for processing and paying claims. Details are still being clarified.

The tax news surrounding COVID-19 changes by the hour, and ATKG will continue to monitor it.  Please don’t hesitate to contact us with any questions you might have.

Allison Miller is a Senior Tax Manager for ATKG. She holds both a bachelor and master degree in accounting from Texas A&M University, having graduated Summa Cum Laude. For further information on this topic or other tax questions please contact Allison Miller or a member of our Tax practice at 210.733.6611 or amiller@atkgcpa.com