Our world has been turned upside down by COVID-19 and there are so many unknowns ahead as the coronavirus impacts the United States. We want to keep you informed on important IRS deadlines for filing tax returns and paying taxes, in addition to recent IRS developments.
It is a common misunderstanding that if you or your business file an extension, that you or your business will also have an extension to pay. Corporations and individuals are typically required to file their income tax returns and pay their taxes on April 15. And, an extension to file is not an extension to pay. Again, you typically have to pay the estimated tax at that time or face interest and penalties through the time you file and pay in full. However, help is on its way for the 2019 tax year.
Temporary IRS Payment Relief
In light of the Coronavirus pandemic, the Federal government is deferring $300 billion in IRS payments. Treasury Secretary Steven Mnuchin announced on March 17th that individuals will be able to defer up to $1 million in tax payments to the IRS for 90 days. Businesses can defer up to $10 million in payments. The payment deferrals are interest free and penalty free. Thus, the new payment deadline is July 15, 2020. The IRS is still encouraging taxpayers to timely file their tax return.
Penalties and interest will begin to accrue on any remaining unpaid balances as of July 16, 2020. If you file your tax return or request an extension of time to file by April 15, 2020, you will automatically avoid interest and penalties on the taxes paid by July 15. This relief only applies to federal income tax (including tax on self-employment income) payments otherwise due April 15, 2020. The relief does not apply to state tax payments or deposits or payments of any other type of federal tax.
If you or your business have failed to timely file or pay taxes in the past, the IRS may have assessed penalties and interest for failure to timely file and pay. Ser & Associates can assist you with your IRS concerns (i.e., with a request for penalty and interest abatement). Give us a call today at 305-222-7282.