Note: Due to the release of Notice 2020-18, this blog has been updated on March 21, 2020.
The United States Treasury Department and the Internal Revenue Service are providing relief to individuals and businesses in response to the COVID-19 pandemic. Notice 2020-18 was issued to update (and cure confusion caused by) Notice 2020-17.
In Notice 2020-18, the Secretary of the Treasury has determined that any person with a federal income tax payment or a federal income tax return due by April 15, 2020 is an “affected person” of purposes of the relief granted under Notice 2020-18 in response to Covid-19. The term “person” includes an individual, trust, estate, partnership, association, company, or corporation.
For affected persons, the due date for filing federal income tax returns, and making federal income tax payments normally due on April 15, 2020 is automatically postposed to July 15, 2020. There is no obligation to file any form with the IRS to obtain the automatic 90-day extension to file and pay the applicable federal income tax. There is no longer any dollar limitation related to the taxes owed to obtain the 90-day extension.
The relief granted in Notice 2020-18 is available solely for federal income tax payments (including payments of self-employment tax) and federal income tax returns due April 15, 2020 in respect of a taxpayer’s 2019 taxable year, and for federal estimated income tax payments (including tax on self-employment income) due on April 15, 2020, for an affected taxpayer’s 2020 taxable year. No extension or other relief is provided for the payment or deposit of any other type of federal tax or for the filing of any other federal information return. It still remains unclear how this relief will impact quarterly income tax estimates due, other than the first quarter’s payment. We will update accordingly, when more information becomes available.
Taxpayers on a payment plan with the IRS should continue to stay current and abide by the terms of their specific agreements. Those taxpayers anticipating refunds from their 2019 tax returns should file their returns promptly. There is no reason to wait and the IRS is encouraging taxpayers in a refund position to file as soon as possible.
The State of Ohio has not yet provided any relief and it is unclear if or when the State will do so. Until word is received from the Ohio Department of Taxation, Ohio taxpayers should plan to file and pay their Ohio taxes (both state and local) pursuant to normal deadlines. We will watch Ohio closely and update accordingly as news breaks, should Ohio grant a filing and payment extension.
The attorneys at McCarthy Lebit remain available to discuss any questions or needs that your business may have. We are continuing to stay apprised of COVID-19 developments and will continue to update our materials accordingly.
