Tax payment deadline extended 90 days but filing deadline remains
With the April 15 tax filing deadline less than four weeks away, the U.S. Treasury has taken action in an effort to provide relief to many Americans in the midst of the economic impacts being felt from the COVID-19 pandemic. On March 17, 2020, Treasury Secretary Steven Mnuchin announced that taxpayers can delay paying federal taxes – as much as $1 million in taxes owed
However, while the deadline to pay taxes has been extended, the deadline to file has not. Taxpayers must still file tax returns on or before Wednesday, April 15, 2020, in order to avoid penalties. In response to the Treasury announcement, the IRS issued formal guidance yesterday, providing further detail on the extension. In addition to clarifying that the extension is only applicable to federal income tax payments (including payments of tax on self-employment income), the guidance also addressed 2020 estimated tax payments, payroll taxes, and estate and gift taxes, which are aspects Mnuchin did not address in Tuesday’s press release. Specifically, the guidance provides that, “affected Taxpayers subject to penalties or additions to tax despite the relief granted by this [payment extension] may [(i)] seek reasonable cause relief under Internal Revenue Code Section 6651 for a failure to pay tax or [(ii)] seek a waiver to a penalty under Internal Revenue Code Section 6654 for a failure by an individual or certain trusts and estates to pay estimated income tax, as applicable.” The guidance further clarified that the relief option with respect to estimated tax payments is not available for corporate taxpayers or tax-exempt organizations.
Internal Revenue Code Section 6651
The failure to pay penalty, found in IRC Section 6651
Internal Revenue Code Section 6654
IRC Section 6654 imposes a penalty on any underpayment of estimated tax by an individual or by certain estates or trusts. Each tax year taxpayers are required to make four installment payments. The penalty can be avoided if the taxpayer establishes that because of casualty, disaster or other unusual circumstances, the imposition of the penalty would be against equity and good conscience.
While some states have already responded to the Treasury’s announcement and extended the state-level payment deadline (extensions range from 60 days to 90 days), the Ohio Department of Taxation has not issued any guidance to date. The American Institute of Certified Public Accountants is maintaining and