The IRS and Commonwealth of Mass. Tax Relief Measures to Aid Employers and Individuals During the Coronavirus Emergency

CLIENT ALERTS Updates on COVID-19 · March 23, 2020

In an effort to respond to the multiple challenges posed by the Coronavirus pandemic, the Internal Revenue Service and the Commonwealth of Massachusetts have announced measures to ease the financial burden on taxpayers.

IRS Notice 2020-17
On March 18th, the IRS issued Notice 2020-17, providing for a 90-day extension of payment of income taxes due on April 15th for the 2019 tax year. Taxes otherwise due on April 15 will now be due on July 15. No penalties or interest will be assessed for this period of time. This extension of time to pay taxes owed also applies to first quarter 2020 estimated tax payments normally due on April 15. First quarter estimated payments must now be made by July 15, after the second quarter’s payment due date of June 15th. This extension applies only to income taxes. At this time no extensions are provided for the payment or deposit of any other type of federal tax, or for the filing of any other type of tax or information return.

Today, March 20th 2020, Treasury Secretary Steven Mnuchin announced that the IRS would also delay the time for filing income tax returns to July 15th. No formal pronouncements have yet been made by the IRS. Taxpayers can always extend their returns further by the new July 15th date. Even if tax returns are extended until October, payment of any tax due must be made by July 15th in order to avoid penalties and interest.

Companies with tax due of up to $10,000,000 and individuals with tax due of up to $1,000,000 (regardless if filing single or jointly) may avail themselves of this extension to pay.

Commonwealth of Massachusetts
A statement on the Department of Revenue’s website states that in “the event the Internal Revenue Service (IRS) issues tax relief to taxpayers with federal filing obligations, DOR is prepared to follow the IRS in offering similar relief for taxpayers with Massachusetts tax filing obligations.”

In addition, the DOR states that it “may also waive penalties under certain circumstances if a taxpayer is late in paying their tax obligation and will work with impacted taxpayers to waive such penalties.”

Lastly, on March 19, 2020, the DOR issued emergency regulations with respect to the room occupancy tax and the sales/meals tax. Under the emergency regulations, certain “operators” (e.g. motels) that are obligated to collect and remit room occupancy taxes, and certain “vendors” (e.g. retail stores and restaurants) obligated to collect and remit sales/meals taxes, are granted an extension of time to file their returns and remit the amounts collected from their customers. These extensions are aimed at assisting small businesses by providing further time to file returns and remit collections. To be eligible for this extension, the operator or vendor must have remitted less than $150,000 in such taxes during the twelve month period ending on February 29, 2020. Qualifying operators and vendors are allowed to delay until June 20, 2020 the filing of returns and remittance of taxes that otherwise would be required to be filed and remitted during March 20, 2020 to May 31, 2020.

We will continue to monitor the IRS and the DOR and provide updates as developments occur.

If you would like additional information, please contact the authors of this alert:

Serge O. Bechade (sbechade@princelobel.com;617-456-8016)
or Will Hazel (whazel@princelobel.com; 617-456-8011)

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