Tax payment holiday until July 15, 2020 – In recognition of the financial hardships caused by the coronavirus pandemic, the U.S. Treasury Department and Internal Revenue Service are providing income tax payment relief for individuals and businesses. Tax payments owed for 2019 that are due by April 15, 2020 may now be paid by July 15, 2020 without incurring late payment penalty or interest. This ruling applies to income taxes only for individuals, corporations, trusts, and estates who share the filing deadline of April 15th, subject to the following limits. The 90-day payment holiday applies only to the first $1 million that is owed by individuals, estates and trusts, and on the first $10 million that is owed by corporations. Any taxes due in excess of these amounts must be paid by April 15, 2020.
According to the IRS, taxpayers must still file their federal tax returns or extensions by April 15, 2020. If you file your tax return or request an extension of time to file by April 15, 2020 you will automatically avoid interest and penalties on the taxes paid by July 15th. Tax returns filed after April 15, 2020 without a timely filed extension may result in a late filing penalty and interest if taxes are owed. For timely filed returns and extensions, penalties and interest will begin to accrue on any remaining unpaid balances on July 16, 2020.
This relief also includes estimated tax payments for tax year 2020 that would normally be due on April 15, 2020, which now may be paid on July 15, 2020. The IRS did not comment on whether relief also applies to estimated taxes due on June 15, 2020, but further clarification is expected.
Taxes owed for state, local, and foreign tax returns should continue to be paid using regular deadlines until relief measures are adopted. As of today, several states have adopted or proposed delayed filing and payment deadlines, while many others have not commented yet. For a current listing of states providing filing and/or payment relief, you are encouraged to review the AICPA’s State Tax Filing Relief Chart (dated 3/18/20) by clicking here. Please be advised this chart will change regularly, so always check for an updated version. We will constantly monitor developments and provide information to our clients as best we can, so be sure to contact your account professional at Santora CPA Group for the critical information and advice you need.
Stimulus incentives – As of today, Congress continues to work out a stimulus plan, but final details are not yet available. It is expected this plan will highlight a one-time only stimulus payment of $1,000 to $2,000 to individual taxpayers meeting certain qualifications. The White House was promoting a payroll tax deferment into late 2020 designed to benefit both working individuals and businesses, but there were concerns this would not benefit those individuals who are unemployed. Further, other relief provisions such as expanded SBA loans to small business owners in need of emergency financing are being rolled out and should be monitored for further developments.
Again, please stay tuned – we’ll let you know when we know. As always, we’re here if you have any questions or concerns, Right, By You Side.