Treasury and IRS to Delay Tax Payment Until July 15
Treasury Secretary Steven Mnuchin announced that taxpayers can delay paying their income taxes on as much as $1 million in taxes owed for up to 90 days.
WASHINGTON, D.C. — If you owe federal income taxes this year because you didn’t withhold enough in 2019, the IRS is giving you a 90-day break as part of its coronavirus response.
In a press briefing on March 17, Treasury Secretary Steven Mnuchin said that individual taxpayers who owe up to $1 million dollars in federal taxes can defer paying until July 15, while corporations can defer up to $10 million.
This would also pertain to owners and shareholders of S Corporations, Partnerships, Sole Proprietorships and certain LLCs.
“The reason we’re doing a million dollars is because it covers a lot of pass-through and small businesses,” Mnuchin noted. He went on to say, “All you have to do is file your taxes — you’ll automatically not get charged interest and penalties. We encourage those Americans who can file their taxes to continue to file on April 15, because for many, you will get tax refunds, and we don’t want you to lose out on those refunds.”
No specific mention was made of changing the filing deadline.
While the payment deadline has been waived it is important to note that you must still file your return (or file for an automatic extension of time to file) by April 15. Many people had hoped that the filing deadline had been extended, but this is not the case.
If you fail to file an extension by April 15 the return will be considered delinquent. There is no provision for late filing an extension and late filing penalties may begin accruing on April 15 and continue until the actual return is filed.
The promise to waive “all penalties and interest” raised some questions for some tax experts. Not addressed in the press briefing was whether or not this will apply to the estimated tax payment of 2020 income taxes due on April 15 for some taxpayers.
Remember: This applies to federal income taxes only. Extending the payment date doesn’t force states to consider changing their filing or payment dates. States may or may not decide if they will defer payments, penalties and interest.
Mitch Reitman is the Managing Principal of Reitman Consulting Group.
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