Update on Federal and Mass. Tax Payment and Filing Extensions: IRS Provides Further Guidance on Federal Tax Extensions

CLIENT ALERTS · March 26, 2020

On March 20, 2020, the IRS issued Notice 2020-18, which provides further guidance on federal tax return filing and tax payment extensions. Under Notice 2020-18 (which replaces previously issued Notice 2020-17), individuals, trusts and estates, and C Corporations with tax returns due on April 15th are provided an automatic extension until July 15, 2020 both to file their 2019 Federal income tax returns and to pay the tax that otherwise would have been due on April 15, 2020.

The Notice also extends to July 15, 2020 the due date for the first quarterly payment of estimated income tax for the 2020 tax year, which was otherwise due on April 15, 2020. However, the Notice does not extend the due date for the second quarterly payment. That payment, for now at least, is due by June 15, 2020. If the second quarter 2020 estimated tax payment is not extended by subsequent IRS action, three Federal income tax payments will be due between June 15, 2020 and July 15, 2020 and taxpayers should budget accordingly. Those three payments are: (i) second quarter 2020 estimated tax payment due by June 15, 2020; (ii) any payment due with the 2019 tax return when it is filed (due by July 15, 2020); and the first quarter 2020 estimated tax payment due by July 15, 2020.

Note that the relief provided by Notice 2020-18 relates solely to Federal income tax returns and payments otherwise due on April 15, 2020 for the 2019 tax year and the first quarter estimated income tax payment due on April 15, 2020 for the 2020 tax year. The IRS has not provided relief for late payment of 2019 estimated income tax payments that were previously due to be paid during the course of 2019 and on January 15, 2020.

Similarly, Notice 2020-18 does not extend the filing deadline for 2019 partnership and S corporation income tax returns that were due to be filed by March 15, 2020, although many taxpayers previously may have filed automatic extensions of the deadline to file those returns. If such partnership or S corporation returns were not filed by March 15, 2020 (and an extension form was not filed before then) those returns are presumably late and should be filed as soon as possible.

Additionally, if an amended return filing is due by April 15, 2020, Notice 2020-18 does not extend that date.

Massachusetts Likely to Follow Suit
The Massachusetts Department of Revenue (“DOR”) is expected to issue a public release providing extensions of the time to pay income taxes and file income tax returns otherwise due to be paid or filed by April 15, 2020, following the rules set forth in Notice 2020-18. As of the release of this Client Alert, the following statement appears on the DOR website:

“DOR is aware that the IRS has issued guidance with respect to tax returns and payments due Apri 15th. We are working on a plan to provide relief with respect to Massachusetts returns and payments.”

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).