COVID-19: Tax Relief and Nonprofit Federal Assistance

The IRS announces that income tax payments due April 15 can be deferred to July 15, regardless of the amount

The IRS and the U.S. Treasury Department have made a series of announcements to provide tax relief in the wake of the coronavirus (COVID-19) pandemic. After previously announcing that taxpayers could defer making federal income tax payments up to certain limits for three months, the IRS has now announced that taxpayers can postpone payments without penalties or interest “regardless of the amount.”

Filing and payment extension

According to new Notice 2020-18, any person with a federal income tax return or payment due on April 15, 2020, has until July 15, 2020, to file a return or make a payment. Specifically, a “person” includes an individual taxpayer, trust, estate, partnership, association, company or corporation. Taxpayers can defer payment of federal income tax (including any self-employment tax) owed for the 2019 tax year from the normal April 15 deadline until July 15. They can also defer their initial quarterly estimated federal income tax payments for the 2020 tax year (including any self-employment tax) from the normal April 15 deadline until July 15.

Previously, the IRS had issued guidance (in Notice 2020-17) stating that corporations could postpone tax payments up to $10 million and all other taxpayers could postpone payments up to $1 million without penalties or interest. In Notice 2020-18, the IRS now states: “There is no limitation on the amount of the payment that may be postponed.”

Normally, when you file an extension, you must still make a good-faith estimate of your tax liability and, by the normal filing deadline, pay the full amount estimated to be due. The relief in Notice 2020-18 is an exception to the general rule.

Taxpayers don’t need to file any additional forms to qualify for this automatic federal tax filing and payment relief. But, if you’re due a refund, you probably still want to file your income tax return as soon as possible so you can receive your money. The IRS stated that “most tax refunds are still being issued within 21 days.”

Small Businesses and Nonprofits Can Start Applying for COVID-19 Related Federal Assistance

On March 20ᵗʰ, the U.S. Treasury Department, Internal Revenue Service and the Department of Labor announced that small and midsize employers, including exempt organizations, can begin taking advantage of two new refundable payroll tax credits, designed to immediately and fully reimburse employers, dollar-for-dollar, for the cost of providing coronavirus-related leave to their employees.

Click here to view the full IRS news release.