Dear members—  

IRS has issued preliminary guidance following up on last week’s presidential announcement of an extended filing season. Following is our effort at determining what that means for enrolled agents and their clients, and what critical questions remain unanswered.  


IRS Issues Guidance on Delayed Payments

IRS and Treasury at roughly 3:00 P.M. ET issued  Notice 2020-17 , which provides guidance on delayed federal income tax payments and sets a new payment deadline of July 15, 2020, for certain returns. 

Treasury Secretary Stephen Mnuchin said in a concurrent  press release : 

Americans should file their tax returns by April 15 because many will receive a refund. Those filing will be able to take advantage of their refunds sooner. This deferment allows those who owe a payment to the IRS to defer the payment until July 15 without interest or penalties.  

As always, God is in the details, but here are what we believe are the most salient points: 

  • The notice defines “affected taxpayers” as any person with a federal income tax payment due April 15, 2020.  

  • Following yesterday’s press conference in which Mnuchin indicated limitations, the applicable postponed payment amount is up to  
  • $10 million for each C corporation that does not join in filing a consolidated return.
  • $1 million for all other affected taxpayers, and adds the detail “regardless of filing status.” 

  • Relief is available solely with respect to payments  
  • due on April 15, 2020, in respect to affected taxpayer’s 2019 taxable year and
  • Federal estimated income tax payments (including self-employment income) due on April 15, 2020, for an affected taxpayer’s 2020 tax year. 

  • Penalties, interest, or additions to tax for failure to pay federal income taxes will be disregarded during the April 15 to July 15 window. Such interest, penalties, and additions to tax will begin to accrue on July 16, 2020. 

  • Affected taxpayers subject to penalties or additions to tax but not granted relief in Notice 2020-17 will need to seek relief under sections 6651, 6654, or 6655, depending on the taxpayer type and relief sought. 

  • No extension is provided for payment or deposit of any other type of federal tax, or for the filing of any tax return or information return.
 
Two things to keep in mind. First, read the last bullet at least twice. This relief, while broad, is also fairly specific. Second, while many enrolled agents continue to be concerned about what is “real” guidance and what is not, we should keep in mind that while the utterances of the Treasury Secretary are not in and of themselves guidance, they are the considered opinion of the Treasury Department (and the White House) and the IRS will follow with necessary guidance. 

Otherwise, according to Allyson Versprille at  Bloomberg Tax , “IRS will stop enforcement actions, including certain levies and collection notices, until further notice in response to the COVID-19 outbreak, according to an alert sent to employees Tuesday.” This means “IRS’ automated collection system will stop all levies and notices” with the exception of LP68 Notices. 

In the “On Deck” Circle  

The first question that occurs to E@lert is what happens to taxpayers who have already filed returns and requested automatic debits on April 15? Will IRS change the date to July 15? Do taxpayers need to file superseding returns to change the debit date? 

Otherwise, given the narrowness of the advice, we find ourselves assuming (fairly comfortably) that unless IRS/Treasury blesses a change, all other deadlines and rules remain in place. Logically, that would mean extensions are not provided without a request—so taxpayers would need to file  Form 4868 —and the window for 2019 IRA contributions remains April 15, 2020. (And while this is a smaller issue, see  here  on Form 8938 and FBAR requirements and due dates.) 

Else, a whole slew of questions on payroll taxes and general IRS enforcement issues remain open for debate. We continue to work with the agency and tax media to ask the questions enrolled agents would like answered. 

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