COVID-19

As we all find ourselves in unknown territory, changes are rapidly being made that affect taxpayers, employers and employees due to COVID-19.

On March 13, 2020, an emergency declaration was issued in response to the ongoing Coronavirus Disease 2019 (COVID-19) pandemic.  The declaration instructed the Secretary of the Treasury to provide relief from tax deadlines to Americans adversely affected by the COVID-19 emergency.  As a result, the Department of Treasury and the Internal Revenue Service issued IRS Notice 2020-17 which postponed Federal income tax payments from April 15, 2020 to July 15, 2020.  Subsequently, IRS Notice 2020-18 was issued which restated and also expanded upon the relief provided in Notice 2020-17.

 

Highlights of IRS Notice 2020-18

  • Any Federal income tax payment or return that is due on April 15, 2020 is automatically postponed to July 15, 2020.
  • No extension is required to be filed.
  • This applies to all payments of Federal income tax due on April 15, 2020 and there are no limitations on the amount of payment.
  • Estimated tax payments due on April 15, 2020 are now due on July 15, 2020.
  • The relief applies to individuals, trusts, estate, corporations or any type of unincorporated business entity.

We have noted several issues not addressed in the notice, some of which are listed below:

  • The relief only applies to Federal income tax.  Therefore, it does not apply to other returns, such as first quarter payroll reports gift tax returns, tax returns for calendar year-end tax-exempt organizations, etc.
  • State and local filing requirements are not affected by this notice.  Some states and cities have made changes to the filing deadline, payment due date or both; however others have not.
  • Extensions may still be filed.  For individuals, an extension will extend the time to file to October 15, 2020; however, the Federal tax is due on July 15, 2020 and interest will start accruing on July 16, 2020.
  • Interest, penalties and addition to tax will apply to untimely filings and payments on July 16, 2020.

The Internal Revenue Service has additional information on their website at https://www.irs.gov/coronavirus for information relating to Coronavirus tax relief.  A link has recently been added for Frequently Asked Questions and can be found at https://www.irs.gov/newsroom/filing-and-payment-deadlines-questions-and-answers.  A couple of key points that we noted on the FAQs pertain to contributions that are typically due on April 15, 2020:

IRA and retirement contributions

Q17. Does this relief provide me more time to contribute money to my IRA for 2019?

A17. Yes. Contributions can be made to your IRA, for a particular year, at any time during the year or by the due date for filing your return for that year. Because the due date for filing Federal income tax returns has been postponed to July 15, 2020, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020.

Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (MSAs)

Q21. Does this relief provide me more time to contribute money to my HSA or Archer MSA for 2019?

A21.  Yes. Contributions may be made to your HSA or Archer MSA, for a particular year, at any time during the year or by the due date for filing your return for that year. Because the due date for filing Federal income tax returns is now July 15, 2020, under this relief, you may make contributions to your HSA or Archer MSA for 2019 at any time up to July 15, 2020.

We are continuing to monitor changes as they occur and will be providing updates as we go along.  Please contact our office at 816-776-3584 if you have questions or concerns.

May we all stay safe in this volatile time and get through this together.

Westbrook CPA