Yesterday, we discussed Secretary Mnuchin’s announcement that the April 15, 2020 income tax payment deadline for 2019 taxes has been pushed back by 90 days for taxpayers, but with a limit on the benefit. Today, the IRS provided the full details in Notice 2020-17.
The notice provides that individuals may defer up to $1 million of Federal income tax payments ($10 million for corporations) until July 15, 2020. For this purpose, Federal income tax payments include the final payment for the 2019 tax year and any quarterly estimated tax payment due on April 15, in the aggregate. Taxpayers do not get a separate deferral amount for each tax year.
The deferral appears to be available for taxpayers who owe more than this amount, but they can only defer up to the limits. For example, an individual taxpayer that owes $400,000 with the 2019 return and $800,000 for the first quarter 2020 would pay $200,000 on April 15 and the balance, $1 million, on July 15, 2020 in order to avoid penalties and interest.
The tax payment deferral only applies to Federal income tax payments. Payments for other taxes due on April 15, 2020, such as gift taxes, are not delayed. In addition, the due date for Federal tax returns are not delayed. Taxpayers should timely file their tax returns or extension applications.