The IRS and the Treasury in a notice announced an extension of time to pay federal income tax for taxpayers who have been adversely affected by the COVID-19 emergency. The due date for payment of tax has been extended from April 15, 2020, to July 15, 2020.
Individuals can defer up to $1 million, and corporations up to $10 million for 3 months. No interest and penalties will be charged till July 15, 2020 – the new payment deadline for 2020.
This extension is only for payment of taxes, not for filing of tax returns. Taxpayers still need to file their tax returns by April 15, 2020.
Moreover, tax payments in excess of the maximum limit ($1 million for individuals and $10 million for corporations) will attract interest and penalties if not paid by the due date of April 15, 2020. The Hill elaborates:
“The guidance specifies that individuals and corporations can defer payments, including for self-employment taxes, that were due April 15 until July 15. It states that the $1 million limits apply both to single filers and to married couples filing joint returns.
Treasury and the IRS also say in the guidance that the extension of the payment due date applies to taxpayers’ 2019 taxes due on April 15 as well as to federal estimated income tax payments due on that date that pertains to the 2020 tax year.
Additionally, the guidance states that the deadline to file tax returns has not been extended and remains April 15. As is the case every year, people can request the IRS to grant them six-month extensions to file their returns.
Mnuchin said in a statement Wednesday that the guidance will help to ensure that ‘hardworking Americans and businesses have additional liquidity for the next several months.’
He also encouraged people to file their returns by April 15 ‘because many will receive a refund.’
Tax professionals had been encouraging the Treasury to extend the filing deadline in addition to the payment deadline to further ease burdens for taxpayers and to ensure that people can receive the tax-preparation assistance they need.”