In response to the COVID-19 epidemic, the U.S. Treasury has issued a notice providing individual and corporate taxpayers with a three-month extension to pay income taxes that are otherwise due on April 15 without penalties or interest. The extension-and-waiver applies to both 2019 taxes and to 2020 quarterly estimated taxes. For individual filers and married couples filing jointly, the waiver of penalties and interest will apply to tax amounts up to $1 million. For corporate filers (including consolidated groups), the waiver of penalties and interest will apply to tax amounts up to $10 million. These caps apply to all payments otherwise due on April 15. For example, if an individual taxpayer owes 2019 taxes in the amount of $800,000 and is required to make a first quarterly estimated payment for 2020 in the amount of $300,000, the taxpayer would still need to make a payment of $100,000 by April 15. If the delayed payments are not made by July 15, penalties and interest will begin to accrue.
The deadline for filing 2019 returns or extension requests has not been extended. That deadline remains April 15.
As Treasury Secretary Steven Mnuchin noted at a press conference on March 17, the extension-and-waiver offers no benefit to individuals or corporations that will receive tax refunds for 2019. They should file 2019 returns as soon as possible in order to receive their refunds and put those dollars to better use.
On March 13, the Oregon Department of Revenue issued a statement indicating that it would follow any changes to federal filing and payment due dates for personal income taxes. The DOR also stated that it would not assess underpayment penalties against businesses that make a "good faith effort" (whatever that means) to estimate their first quarterly payments of the new Corporate Activity Tax. We expect that the DOR will update this statement to reflect the new Treasury notice.
The revenue departments in other states are also changing their filing and payment policies in response to the pandemic. The American Institute of Certified Public Accountants has created a helpful chart with information on state policies and is updating it daily.
Finally, we know that our clients are being inundated with emails and social media alerts about the latest governmental responses to the pandemic. Please remember that in tax, details matter. Be wary of whatever you read about changes to tax rules and policies, particularly if it's published shortly after an official announcement and is authored by someone who is not an attorney or CPA at a firm you know and trust. For our part, we will not intrude on your time unless we have actionable and accurate insights or information to share.
This update is prepared for the general information of our clients and friends. It should not be regarded as legal advice. If you have questions about the issues raised here, please contact any of the attorneys in our Tax Practice Group, or the attorney with whom you normally consult.