Federal Individual Tax Return and Payment Deadlines - Not What You Think They Might Be

Current as of 3/18/2020 8:00 AM

On Tuesday, Department of Treasury Secretary Steven Mnuchin announced that the Treasury Department and the IRS would be accepting 2019 tax payments interest and penalty free for up to 90 days. Specifically, he said “If you owe a payment to the IRS, you can defer up to $1 million as an individual.” He noted that he believes this amount should cover “lots of pass-throughs and small businesses.” “All you have to do is file your taxes, you’ll automatically not get charged interest and penalties.”

A not so common adage, but maybe appropriate here is that “governing is in the details.” What does this limited amount of information truly mean in light of the fact that there has been no formal written press release issued by the IRS or official IRS announcement? Here are our thoughts:

• It appears that extensions, though generally automatic, will still need to be filed by April 15, 2020.
• If you are owed a refund, you will still generally desire to file your federal return by April 15, assuming your particular circumstances allow. There was no comment on whether interest be paid on money the government would owe to you on refunds but generally the IRS does not pay interest when refunds are paid within 45 days of the filing deadline (including extensions). 
• A reasonable estimate of tax liability will need to be made for if you owe more than $1,000,000 in federal taxes. A balance due in excess of that amount does not appear to escape assessment of penalties and interest.
• No specific guidance on the penalty and interest provisions has been released. For example, does the penalty relief only apply from April 15 until the date of payment (or 90 days)? What if the late payment can be traced back to a payment due June 15, 2019? Will interest be due on that balance from June 15, 2019 until April 15, 2020?
• In addition, there is no guidance regarding whether the federal estimated tax due date of April 15 will be extended.

At this time, there are still many unknowns. We, like you, are anxious for clarification from the Internal Revenue Service – the definitive source for matters related to federal tax compliance requirements. Our best advice is to move forward with the assumption that the April 15th due date is not extended. Your team at Schneider Downs is operating at full business capacity and expects to do so even if the deadline is extended. 

Schneider Downs remains at the ready to help address all your needs and concerns during these challenging times.  

We’ll continue to monitor this situation and will provide additional updates as information becomes available.