Note: Due to the release of Notice 2020-18, this blog has been updated on March 21, 2020.
The United States Treasury Department and the Internal Revenue Service are providing relief to individuals and businesses in response to the COVID-19 pandemic. Notice 2020-18 was issued to update (and cure confusion caused by) Notice 2020-17.
In Notice 2020-18, the Secretary of the Treasury has determined that any person with a federal income tax payment or a federal income tax return due by April 15, 2020 is an “affected person” of purposes of the relief granted under Notice 2020-18 in response to Covid-19. The term “person” includes an individual, trust, estate, partnership, association, company, or corporation.
For affected persons, the due date for filing federal income tax returns, and making federal income tax payments normally due on April 15, 2020 is automatically postposed to July 15, 2020. There is no obligation to file any form with the IRS to obtain the automatic 90-day extension to file and pay the applicable federal income tax. There is no longer any dollar limitation related to the taxes owed to obtain the 90-day extension.
The relief granted in Notice 2020-18 is available solely for federal income tax payments (including payments of self-employment tax) and federal income tax returns due April 15, 2020 in respect of a taxpayer’s 2019 taxable year, and for federal estimated income tax payments (including tax on self-employment income) due on April 15, 2020, for an affected taxpayer’s 2020 taxable year. No extension or other relief is provided for the payment or deposit of any other type of federal tax or for the filing of any other federal information return. It still remains unclear how this relief will impact quarterly income tax estimates due, other than the first quarter’s payment. We will update accordingly, when more information becomes available.
Taxpayers on a payment plan with the IRS should continue to stay current and abide by the terms of their specific agreements. Those taxpayers anticipating refunds from their 2019 tax returns should file their returns promptly. There is no reason to wait and the IRS is encouraging taxpayers in a refund position to file as soon as possible.
The State of Ohio has not yet provided any relief and it is unclear if or when the State will do so. Until word is received from the Ohio Department of Taxation, Ohio taxpayers should plan to file and pay their Ohio taxes (both state and local) pursuant to normal deadlines. We will watch Ohio closely and update accordingly as news breaks, should Ohio grant a filing and payment extension.
McCarthy Lebit attorneys remain committed to serving our clients and helping our country and communities during this turbulent period. We are all in this together and we will stay apprised of local and national developments to help our clients, friends, neighbors and colleagues on the road ahead. Do not hesitate to contact us if we may be of service as our attorneys remain available during the national shutdown.
Jonathan Wolnik is an associate at the Cleveland-based law firm, McCarthy, Lebit, Crystal & Liffman.
While we would be thrilled to work with all individuals, institutions and companies that read our advisories, we want to clarify that these insights do not form a lawyer-client relationship and represent only general guidance without access or reference to all of the specific facts and circumstances. If you do wish to engage McCarthy Lebit on a specific matter, please contact us by calling 216-696-1422 or by filling out an inquiry form located here. If you are already a firm client, please contact the McCarthy Lebit attorney you work with to discuss these advisories and/or the nature of your concern. In closing, please understand that the law, especially during this pandemic, is changing rapidly and we would recommend that you regularly contact your legal counsel to ensure that your actions are taken based on the most up-to-date versions of the laws.