KEY POINTS

  • Tax returns were due on April 15, but payment on those returns wouldn’t be due until July 15
  • Even if you owe the IRS more than a million dollars when you file your 2019 tax return by July 15, you will not face penalty or interest charges on all that money
  • Many states are providing their own piggy-back relief, and at this writing, it seems likely that all states will probably get on board

With life safety concerns paramount in our new COVID-19 reality, it can be easy to forget for a time about more pedestrian issues like taxes.

But taxes won’t go away entirely. Thankfully, the IRS has granted some relief to taxpayers, extending both the upcoming filing and payment deadlines until July 15, 2020. That is a big relief as we stare down the health scare that has shuttered many businesses and laid off many employees. And the end of the economic and life upheaval is not yet in sight.

The IRS extended the payment deadline first and has issued a formal notice about it. See IRS Notice 2020-17. For much of last week, taxpayers and their tax preparers were gearing up for a situation where tax returns were due on April 15, but payment on those returns wouldn’t be due until July 15. Finally, last Friday, March 20, the IRS made it clear that the tax filing deadline is also extended.

All taxpayers and businesses have this additional time to file and make payments without interest or penalties. That is a big relief to many, including the armies of tax professionals, many of whom can’t operate from their offices at this time. However, taxpayers who expect to receive tax refunds can always file before the extended filing deadline in order to get their tax refunds sooner.

There was also confusion last week about the limits—whether there were dollars amounts you might owe that were too big to put off until July 15. At first, there was a $1 million limit on the 3 months of tax deferral. But on Friday, March 20, the IRS did away with that too. So even if you owe the IRS more than a million dollars when you file your 2019 tax return by July 15, you will not face penalty or interest charges on all that money.

Finally, don’t forget about any state taxes, since they are not covered by the IRS guidance. Many states are providing their own piggy-back relief, and at this writing, it seems likely that all states will probably get on board. Still, check with your own state to make sure you don’t have a gap between the IRS relief and the tax relief in your state. Of course, if you are lucky enough to live in a no income tax state like Texas, Florida, Washington or a handful of others, you should be home free.

Does all of this more generally mean a kinder and gentler IRS, or maybe even your state’s tax administrators? It is hard to tell, but you should not count on it. Thus, if you have installment payments due, or owe the IRS or state a response to a tax notice by a certain date, it would be best to try to meet it. There might conceivably be some latitude given because of the extraordinary circumstances people are now facing. But it is best not to count on it.

Robert W. Wood is a tax lawyer and managing partner at Wood LLP. He can be reached at Wood@WoodLLP.com

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