Trump Administration Announces Tax Day Moved to July 15
(Updated March 23, 2020)
Treasury Secretary Steven Mnuchin announced via Twitter on March 20 that the April 15 tax filing deadline is postponed to July 15. The IRS formalized this announcement later the same day, and by March 23, the IRS had revised and expanded the scope of the relief. According to Secretary Mnuchin’s Twitter announcement, “At @realDonaldTrump’s direction, we are moving Tax Day from April 15 to July 15. All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.”
The IRS announcement confirms that the income tax relief measures apply to any taxpayer with an income tax return or income tax payment due on April 15. This includes individuals, corporations, partnerships, trusts, and estates. Further, there is no limitation on the amount of income tax payment that is postponed. Initially, the IRS limited the relief to income tax payments up to $1 million for individuals or $10 million for corporations; the current announcement supersedes this previous guidance to permit postponement for an unlimited amount of income taxes due on April 15. Additionally, any amount of estimated income tax payments due on April 15 is also postponed, together with any payments or estimated payments of tax on self-employment income.
The income tax filing and payment relief applies automatically, so taxpayers do not need to file any forms or request an extension. As a result, taxpayers will have until July 15, 2020, to file income tax returns and pay any income taxes that were originally due April 15. The tax relief measures apply solely with respect to income tax payments and income tax returns, and specifically do not apply to any other type of federal tax or the filing of any federal information return.
The IRS announcement specifies that the date for filing income tax returns and for payment of income taxes is automatically “postponed” to July 15 under authority of Section 7508A, which grants the IRS authority to postpone certain tax requirements for up to one year with respect to a federally declared disaster. This terminology is an important distinction from an “extension.” By postponing the April 15 due date to July 15, the original due date effectively becomes July 15 for most purposes, because the IRS disregards the time period between April 15 and July 15 for the performance of “tax-related acts.” Among the list of tax-related acts that are eligible for postponement under the Section 7508A regulations is a contribution to a qualified retirement plan (such as IRA contributions). As a result, taxpayers should have until July 15 to make IRA contributions for 2019; however, because the IRS announcement did not specifically include this tax-related act in its announcement, there remains some degree of uncertainty whether the IRA contribution deadline is also postponed.
The regulations make it clear that any extension request filed by July 15 will only result in an extension to October 15. So even though July 15 is treated as the original filing date for most purposes, 2019 income tax returns originally due April 15 cannot be extended beyond October 15.
As previously noted, the tax relief measures do not apply to other types of federal tax returns or other types of federal taxes, and this means that the due date for gift tax returns and associated excise tax payments is still April 15. Section 6075(b) provides that any “extension” of time granted for the filing of an income tax return is deemed to be an extension for the gift tax return, but by postponing the filing date, no extensions are required, and as a result, the separate April 15 due date for gift tax returns appears to remain. The filing of a gift tax return is also on the list of tax-related acts that are eligible for postponement under the Section 7508A regulations, however, so the filing date should be automatically postponed to July 15. Like the IRA contribution, however, the IRS did not include this particular act in its announcement, which creates a level of uncertainty.
Other ambiguities and peculiarities have emerged in light of the IRS announcement. For example, the first quarter estimated income tax payment obligation was postponed from April 15, 2020 to July 15, 2020, but the second quarter estimated income tax payment obligation is still due on June 15, 2020. This means that the second quarter estimated income tax payment is due before the first quarter estimated income tax payment. Legislation was introduced in the Senate on March 19 that would delay the due date for estimated tax payments until October 15, 2020, which would alleviate this problem.
We anticipate the IRS will issue additional guidance to clarify some of these remaining ambiguities.
We will keep you apprised of any IRS announcements that clarify or change these tax relief measures. Should you have any questions regarding the tax filing extension, please contact your CBIZ tax professional.