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IRS NOTICE 2020-17 Relief for Taxpayers affected by COVID-19

by Nick Gibbons

In response to the ongoing coronavirus (COVID-19) pandemic, the President issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act instructing the Secretary of the Treasury “to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency.”

Pursuant to the emergency declaration, the IRS issued Notice 2020-17, specifying the relief.


Highlights

Any Taxpayer With A Federal Income Tax Payment Due on April 15

Corporate taxpayers (consolidated groups or for each C corporation that does not join in a consolidated return) owing federal income tax on April 15, 2020, may defer up to $10 million until July 15, 2020.

All other taxpayers (e.g., individuals, S corporations, partnerships, trusts, etc.) owing federal income tax on April 15, 2020, may defer up to $1 million until July 15, 2020.

This also includes payments of tax on self-employment income and federal estimated income taxes, due April 15, 2020, for the 2020 taxable year.

April 15 Filing Deadline Remains

No extension is provided in the IRS notice for the payment or deposit of any other type of federal tax, or for the filing of any tax return or information return (THIS INCLUDES EXTENSIONS).


Armanino Observations & Emphasis

  1. First-quarter estimated tax payments are included in the relief. Second-quarter payments are not included, which we believe means that some federal income tax payments could be due before July 15, 2020 (e.g., Q2 estimated payments).
  2. We believe that this notice does not provide relief to fiscal year corporations unless they have payments “due April 15, 2020.”
  3. The notice states that the $1 million exemption is up to $1 million regardless of filing status. Thus, can you file married filing separate and get two exemptions? This seems contrary to the intent of the notice but the example in the notice states that a single taxpayer and married individuals filing a joint return each get $1 million. There is no comment about married filing separate.
  4. We believe that the extension must properly estimate the tax.
  5. The $1 million and $10 million amounts are cumulative (i.e., extension payment + Q1 estimate).
  6. Deferred interest and penalties do not include any deficiencies for 2019 Q1-Q3 payments.

We’re Here to Help

We’re closely monitoring the hour-by-hour changes, and we will send out updates as they become available. If you have any immediate concerns related to you, your family or your business, we are here to help. Reach out to your local Armanino advisor and we will get back to you as soon as possible.

March 19, 2020

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