Last Friday, the Treasury Department and IRS revised their guidance from earlier in the week and issued a notice granting taxpayers an extension until July 15 to file income tax returns and make income tax payments that would normally be due on April 15. On Tuesday, the IRS posted FAQs addressing a number of specialized tax issues raised by the extension. The original version of the extension only applied to tax payments (and not filings), and there were dollar limits for individual and corporate taxpayers. Those dollar limits have now been dropped.
On Wednesday, the Oregon Department of Revenue announced that it was partially adopting the federal extension. We will issue a separate alert with details on Oregon's extension policy.
You should keep four points in mind as you consider how the federal filing-and-payment extension affects your tax situation:
First, the extension only applies to income tax filings and payments otherwise due on April 15. It covers income taxes and self-employment taxes (FICA and Medicare taxes paid by self-employed persons) for 2019 as well as estimated payments of income taxes and self-employment taxes for the first quarter of 2020. It does not affect an employer's obligation to withhold and remit payroll and income taxes, pay the employer portion of payroll taxes, or make related filings such as IRS Form 941. Interestingly, the extension benefits procrastinators who have not yet made contributions to their IRAs for 2019: the deadline for those contributions has also been extended to July 15.
Second, the extension does not apply to 2020 quarterly estimated tax payments that are due on June 15. Those payments continue to be due on June 15.
Third, the deadline for filing a 2019 return on an extension remains October 15. It will still be necessary to file for an extension covering the period from July 15 to October 15.
Fourth, remember that accountants have been disrupted by the COVID-19 pandemic just like other professional service providers. They will probably be quite busy later this year as they work toward the new July 15 deadline for 2019 returns and catch up on backlogged work. If you usually file for an extension and then have your accountant prepare your return in the summer or early fall, do your accountant (and yourself) a favor: contact him or her as soon as possible to confirm when you'll need to send over your 2019 tax documents in order for your return to be ready by the October 15 filing deadline. And be sure to make your final 2019 tax payments by July 15.
If you have any questions about the issues raised above, please contact a member of our Tax Practice Group.