Announced 2019 Tax Liability Payment Holiday

UPDATE: Filing Deadline Extended (March 20, 2020)

 This morning on Twitter, Treasury Secretary Mnuchin announced that the IRS would extend the filing deadline from April 15, 2020, to July 15, 2020, commensurate with the tax payment postponement announced in Notice 2020-17.

UPDATE: Notice 2020-17 (March 18, 2020)

The IRS has issued Notice 2020-17 (the “Notice”) today, March 18, 2020, confirming Secretary Mnuchin’s announcement yesterday, detailed below.

The Notice provides that any person with a Federal income tax payment due date of April 15, 2020 (“Affected Taxpayer”), can postpone the payment to July 15, 2020, up to an “Applicable Postponed Payment Amount.” The Applicable Postponed Payment Amount is up to $10,000,000 for each consolidated group (as defined in §1.1502-1 of the Treasury Regulations). For all other Affected Taxpayers, the Applicable Postponed Payment Amount is up to $1,000,000 regardless of filing status. For example, the Applicable Postponed Payment Amount is the same for a single individual and for married individuals filing a joint return. In both instances, the Applicable Postponed Payment Amount is up to $1,000,000.

The relief provided in the Notice is available solely with respect to Federal income tax payments (including payments of tax on self-employment income) due on April 15, 2020, in respect of an Affected Taxpayer’s 2019 taxable year, and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for and Affected Taxpayer’s 2020 taxable year. No extension is provided in the Notice for the payments or deposits of any other type of Federal tax, or for the filing of any tax return or information return.

As a result of the postponement of the due date for making Federal income tax payments up to the Applicable Postponed Payment Amount from April 15, 2020, to July 15, 2020, the period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to pay the Federal income taxes postponed by the Notice. Interest, penalties, and additions to tax with respect to such postponed Federal income tax payment will begin to accrue on July 16, 2020. In addition, interest, penalties, and additions to tax will accrue, without any suspension or deferral, on the amount of any Federal income tax payments in excess of the Applicable Postponed Payment Amount due but not paid by an Affected Taxpayer on April 15, 2020.

The Notice may be found under the “Guidance” section of the IRS’s coronavirus webpage.

In the White House daily coronavirus press conference on March 17, Treasury Secretary Steven Mnuchin announced that individuals and corporations will be able to defer up to $1 million and $10 million, respectively, in 2019 federal tax payments for 90 days. Interest and penalties will not be imposed on any tax payment deferred in accordance with this announcement. Mnuchin announced that taxpayers should timely file tax returns even if they defer tax payments pursuant to the initiative. The purpose of the deferral is to keep up to $300 billion of liquidity in the economy. Mnuchin indicated that this initiative has no effect on taxpayers entitled to federal income tax refunds nor does it have any effect on state tax payments.

It is important to note that, as of yet, there is no official written outline or guidance on this policy. The IRS has established a webpage to help taxpayers affected by the coronavirus that is updated as new information is available. We will update our alert as further guidance is released.