IRS and NCDOR Extend April 15th Tax Return Filing and Payment
March 25, 2020
Just days after issuing guidance deferring the payment of certain tax obligations but maintaining the April 15 tax filing deadline, the IRS has changed course and announced in Notice 2020-18 that it is indeed extending the April 15 tax filing deadline.
Specifically, for any “person” with a federal income tax payment or a federal income tax return due April 15, 2020, the due date for filing and making such payments is automatically postponed to July 15, 2020. (“Person” includes an individual, trust, estate, partnership, association, company or corporation.) Affected taxpayers do not have to file extensions (Forms 4868 or 7004). Unlike the initial advice from the IRS, there is no limitation on the amount of the payment that may be postponed.
This relief is available solely with respect to federal income tax payments (including payments of tax on self-employment income) and Federal income tax returns due on April 15, 2020 in respect of a taxpayer’s 2019 taxable year and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020 for the taxpayer’s 2020 taxable year. No extension is provided for the payment or deposit of any other type of federal tax or for the filing of any federal information return.
Regarding interest and penalties, the period beginning on April 15, 2020 and ending on July 15, 2020 will be disregarded in the calculation of any interest, penalty or addition to tax for failure to file the federal income tax returns or to pay the federal income taxes postponed by the Notice. Interest, penalties and additions to tax with respect to the postponed federal income tax filings and payments will begin to accrue on July 16, 2020.
North Carolina has generally followed IRS April 15th tax return filing and payment due date relief. The North Carolina Department of Revenue has automatically extended until July 15, 2020 the time for filing income and franchise tax returns originally due on April 15, 2020. The extended due date applies to individual, corporate, partnership, estate, and trust returns. The extension is granted automatically therefore there is no action required in order to receive the extension. No penalties will be assessed for failure to file or for late payment if the return is filed and the amount of income tax due is paid on or before July 15, 2020, respectively. However, under current state law and without action by the State Legislature, interest may not be waived and will accrue on any tax liability paid after April 15, 2020.
If you are unable to file your 2019 federal and North Carolina income tax returns originally due on April 15, 2020 by July 15, 2020, you must request an automatic extension to October 15, 2020 by filing the appropriate forms with the IRS or North Carolina Department of Revenue by July 15, 2020.
- The IRS Notice does not cover second quarter estimated income tax payments due on June 15, 2020. This omission currently creates odd payment deadlines, as first quarter estimated income tax payments are due July 15, 2020, while second quarter estimated income tax payments are due June 15, 2020. Future IRS action or federal legislation could fix this discrepancy.
- The impact of the IRS Notice on the filing of 2019 federal gift tax returns is unclear. Clarification is required.
- If Form 990-T (“Exempt Organization Business Income Tax”) is due to be filed on April 15, it is postponed to July 15. For taxpayers whose Form 990-T is due on May 15, that due date is NOT postponed.
- Scheduled payment of tax – If a 2019 federal income tax return due on April 15, 2020 was already filed and a payment of taxes was scheduled for April 15, 2020, that payment will not be automatically rescheduled to July 15, 2020. If the taxpayer does nothing, the payment will be made on the date the taxpayer chose.
- Individual Retirement Account contributions for 2019 can be made until July 15, 2020.
- Health Savings Account or Archer Medical Savings Account contributions for 2019 can also be made until July 15, 2020.
- The extended due date for filing North Carolina Business Personal Property Tax Listings with the applicable North Carolina county property tax office currently remains April 15, 2020.
- The NC extension of time to file does not apply to NC trust taxes such as sales and use taxes or withholding taxes.
- It is unclear to what extent the various other states will conform their tax filing and payment schedules to those of the IRS. This will likely evolve quickly over the upcoming days.
We will keep you informed of new tax developments as they arise.
Please contact the professionals at Gilliam Bell Moser for further guidance.