IRS: Notice 2020-17, Relief for Federal Taxpayers in response to COVID-19 – March 18, 2020

Fuller Landau Team • March 19, 2020

On Wednesday, March 18, 2020, the Internal Revenue Service (IRS) released an advance copy of Notice 2020-17 setting forth broad relief for certain taxpayers to defer payment of federal income taxes coming due. Notice 2020-17 is in response to President Trump’s March 13 emergency declaration regarding COVID-19 (coronavirus).

IMPORTANT: Notice 2020-17 does not extend the filing date for returns or extensions due on April 15, 2020.

In summary, with more details to follow from the IRS, Notice 2020-17 includes the following provisions:

  • Any person with a federal income tax payment due April 15, 2020, is considered affected by the COVID-19 emergency for purposes of tax relief and is an affected taxpayer.
  • For affected taxpayers, the due date for making federal income tax payments due April 15, 2020, in an aggregate amount up to the applicable postponed payment amount, is postponed to July 15, 2020.
  • For affected taxpayers who are not corporations, the applicable postponed payment amount is up to $1 million regardless of filing status. In other words, the amount is the same for a single individual and for married individuals filing a joint return.
  • For affected taxpayers who are corporations, the applicable postponed payment amount is up to $10 million.
  • Notice 2020-17 only applies to federal income tax payments due on April 15, 2020 for affected taxpayers’ 2019 tax year and federal estimated income tax payments due on April 15, 2020 for affected taxpayers’ 2020 tax year.
  • Interest, penalties, and additions to tax will not accrue for a failure to file for the period beginning on April 15, 2020 and ending on July 15, 2020.
  • Interest, penalties, and additions to tax with respect to amounts of postponed federal income tax payments will begin to accrue on July 16, 2020.
  • Interest, penalties, and additions to tax continue to accrue on federal income tax payments in excess of the applicable postponed payment amount due but not paid by affected taxpayers on April 15, 2020.
  • Affected taxpayers who may still be subject to penalties or additions to tax notwithstanding the Notice may seek reasonable cause relief under IRC Sec. 6651 or a waiver under IRC Sec. 6654. However, this relief does not apply for estimated tax payments by corporations or not-for-profit entities.

We expect many states to follow the IRS actions. As well, we expect additional guidance from IRS shortly.

If you have any questions, please reach out to your Fuller Landau LLP engagement team.