April 15 Tax Deadline Moved To July 15 (Live Updates) (2024)

Updates

May 20:2019 calendar-year partnership and S-Corp tax returns, and 2020 Section 475 elections for partnerships and S-Corps, were due March 16, 2020. These pass-through tax returns and entity 475 elections arenoteligible for virus tax relief with the July 15, 2020 postponement deadline. Postponement relief is limited to 2019 tax returns due April 1, 2020, or after, and the March 16 deadline was before April 1. However, fiscal-year partnership or S-Corp tax returns due on April 1, 2020, or later are eligible forthe July 15 deadline.

Traders have calendar-year partnerships and S-Corps, so these entities are not eligible for the July 15 postponement date. Mosttradersfiled 2019 partnership or S-Corp extensions by March 16, some along with 2020 Section 475 elections for the entity. Some of these traders asked our firm if their entity could take advantage of the postponed deadline for making a Section 475 MTM election. The answer is no. Individual traders (sole proprietors) are eligible for July 15 relief for filing 2019 individual tax returns, extensions, and 2020 individual Section 475 elections.

April 10:All states with a personal income tax have extended theirApril 15 due dates.(See AICPAstate filing conformity chartthat they update.)

April 9: IRSNotice 2020-23,dated April 9, states on page 7:“Finally, elections that are made or required to be made on a timely filed Specified Form (or attachment to a Specified Form) shall be timely made if filed on such Specified Form or attachment, as appropriate, on or before July 15, 2020.”

Good news: TTS traders as sole proprietor individuals now have toJuly 15, 2020, to elect Section 475(f) for 2020, as the 475 MTM election is an attachment to a specified form, either F1040 or F4868. Previously, we recommended TTS traders elect 475 by April 15, 2020, to play it safe.

The June 15, 2020 deadlines for U.S. residents abroad and also Q2 2020 estimated tax vouchers are also moved to July 15, 2020. (SeeIR-2020-66, April 9, 2020). The July 15 deadline now also applies to trusts and estates: “Today’s notice expands this relief to additional returns, tax payments and other actions. As a result, the extensions generally now apply to all taxpayers that have a filing or payment deadline falling on or after April 1, 2020, and before July 15, 2020. Individuals, trusts, estates, corporations and other non-corporate tax filers qualify for the extra time. This means that anyone, including Americans who live and work abroad, can now wait until July 15 to file their 2019 federal income tax return and pay any tax due.”

March 25:

475 elections: Our Darren Neuschwander CPAcommunicated with the IRS Chief Counsel’s office for making Section 475(f) MTM electionsabout whether to file a Section 475 MTM election by April 15 or July 15. (See the full update on our separate blog post Massive Market Losses? Elect 475 For Enormous Tax Savings.)

State taxes:AICPA State Tax Filing Relief Chart for Coronavirus: The AICPA has compiled this chartwith the latest developments on state tax filings related to coronavirus, including states that conformed to the IRS postponement of the April 15 deadline to July 15. Not all states have conformed; for example, New Jerseyhad not as of March 25.

AICPA Calls on Treasury, IRS to Provide Extensive Relief to Taxpayers. IRSNotice 2020-18 and relatedFAQs are helpful, but I agree with the AICPA that taxpayers need broader relief from Treasury. See the IRSCoronavirus Tax Relief page.

March 24:The IRS published FAQs to support Notice 2020-18for the tax deadline postponement to July 15: Filing and Payment Deadlines Questions and Answers. CPA industry groups will likelyask for another round of FAQs to address unanswered questions. It’s important to note that FAQs are not yet “substantial authority,” as tax notices are, and the IRSoftenchanges FAQsat afuture date likeit recently did with cryptocurrency.

Here’s what we know:

• The IRS moved the IRA and HSA contribution deadlines from April 15 to July 15 (Q17 and Q21).
• July 15 extensions: FAQ A12. “If you are an individual, you can request an automatic extension to file your Federal income tax return if you can’t file by the July 15 deadline. The easiest and fastest way to request a filing extension is to electronically file Form 4868 through your tax professional, tax software, or using theFree Filelink on IRS.gov. Businesses, including trusts, must file Form 7004. You must request the automatic extension by July 15, 2020. If you properly estimate your 2019 tax liability using the information available to you and file an extension form by July 15, 2020, your tax return will be due on Oct. 15, 2020. To avoid interest and penalties when filing your tax return after July 15, 2020, pay the tax you estimate as due with your extension request.”
• Elections: The FAQs don’t mention the word “elections,” including the Section 475 election for TTS traders. TheSection 475 MTM election wording comes directly from Rev Proc 99-17, which states:
  

  “The (election) statement must be filed not later than the due date (without regard to extensions) of the original federal income tax return for the taxable year immediately preceding the election year and must be attached either to that return or, if applicable, to a request for an extension of time to file that return.”

  It seems logical to conclude that a 2020 Section 475 election is due July 15, but this has not been confirmed yet. If the IRS does not explicitly address this question, then a TTS trader with a massive 2020 YTD trading loss might want to file a protective extension request with 475 election statement attachment by April 15 to play it safe.

March 23: After Treasury moved the tax deadline to July 15, a newerversion of the CARES Act bill removed thesection about shifting the tax deadline “and elections” to July 15. The IRS has not yet addressed moving elections and IRA and HSA deadlines to July 15. The open question is: Can TTS traders submit a 475 election by July 15, 2020? The regular due date for a 475 election is April 15. Treasury and the IRS promised FAQs about the deadline postponement soon, and hopefully, it will answer open questions about elections, IRAs, and HSAs.

March 20:Treasury Secretary Steven Mnuchin announced President Trump’s directiveto move the April 15 tax deadline to July 15, 2020, therebypostponing tax filings and tax payments for all taxpayers. The new rules in Notice 2020-18remove the $1M cap on individualsincluded in the supersededNotice 2020-17,so all tax payments are penalty and interest-free until July 15. Mnuchin said the extension would give “all taxpayers and business this additional time” to file returns and make tax payments “without interest or penalties.” The Treasury Department promisedFAQs soon.Hopefully, all states will follow suit with this federal change, so taxpayers don’t face conflicting rules.

Congress shouldproceed with new legislation like theCoronavirus Aid, Relief, and Economic Security Actto provide additional tax relief, beyond the Treasury Department moving tax deadline to July 15. Senate MajorityLeader Mitch McConnell’sCARES Act billtemporarily suspends the Tax Cuts and Jobs Act business loss limitations, including reauthorizing NOL five-year carrybacks, repealing the excess business loss (EBL) limitation, andloosening the business interest expense limitation. That’s fantastic news, as businesses need tax relief for losses ASAP. Here are the related CARES Act provisions:

• 2203: Section 172(b)(1) – “Net Operating loss carrybacks and carryovers” – Special Rule for losses arising in 2018, 2019 and 2020, such loss shall be a net operating loss carryback to each of thefive taxable years preceding the taxable year of such loss.
• 2203: Temporary repeal of 80% income limitation to deduct a 2018 and forward NOL for year beginning before 2021.
• 2204: Repeal of 461(l) for 2018, 2019, and 2020 – excess business losses
• 2206: 163(j) special rules for 2019 and 2020, increasing ATI percentage from 30% to 50% for limitation on business interest

CPA industry groups are also asking Congressto raisethe $3,000 capital loss limitation, which they never indexed for inflation. Stay tuned.

March 19:Senator John Thune introduced a two-page bill Tax Filing Relief for America Act“To extend the due date for the return and payment of Federal income taxes to July 15, 2020, for taxable year 2019.” Treasury and the IRS recently issued guidance to delay certain tax payments for 90 days until July 15. Still, Treasury did not postpone the April 15 tax filing deadline, putting an undue burden on taxpayers and accountants. Thune’s legislation syncs tax filings with tax payments in a simple manner, whereas Treasury’s guidance is causing tremendous confusion. LeaderMcConnell just introduced the Coronavirus Aid, Relief, and Economic Security Act, whichincorporates Thune’s bill. Thanks to the AICPA for pushing Congress and Treasury hardto get this critical April 15 tax relief. See theAICPA Coronavirus Resource Center. Stay tuned.

March 18: Treasury issued guidance in Notice 2020-17. It’s now official: As usual, individuals must file extensions on Form 4868 by April 15. Submitting this form with little tax information avoids excessive late-filing penalties, which are 5% per month up to 25% maximum on balance-due payments. Thecoronavirus relief only allows individuals to defer income tax payments up to $1M until July 15, without application of interest and “penalties,” and I think they mean late-payment penalties of 0.5% per month up to 5% maximum. Taxpayers can file a one-page extension Form 4868 without making tax payments until July 15.That should make quick work of the extension, which is essential as many taxpayers and accountants are overwhelmed with the impact of coronavirus. This Treasury guidance includes deferral for Q1 2020 estimated tax payments due by April 15, but not Q2 on June 15. (SeeIRS Notice 2020-17 with highlights.)

March 17: Treasury SecretaryMnuchin said ifyou owe a tax paymentto the IRS, you can defer up to $1M as an individual and $10M as a C-corp. Tax payments will be interest and penalty-free if you file within 90 days of theApril 15deadline. “All you have to do is file your taxes,” he said. “You’ll automatically not get charged interest and penalties.” We need to see the fine print; there are many open questions.Mnuchin’s statement indicates taxpayers should still file an automatic extension on Form 4868 by April 15 to extend the tax return filing deadline six-months until Oct. 15. If a taxpayer cannot file an extension by April 15 due to the impact of coronavirus, then the IRS would be hard-pressed to deny reasonable cause for abatement of late-filing penalties.

— Per Bloomberg Tax, “Updates to make clear that taxpayers still must file by April 15 or seek an extension.” And,“The administration is also considering delaying the estimated quarterly tax payments that self-employed workers and businesses pay the IRS throughout the year,accordingto two people familiar with the matter. The first payment is typically due April 15.”

— Traders should file Section 475 elections by the April 15, 2020 deadline, sinceTreasury didn’t change the April 15 deadline;it is providing a 90-day extension for tax payments.I doubt Treasury wants to give traders 90 more days of hindsight on making 475 elections.

March 15: AICPA News: “Based upon our conversations, we anticipate that Treasury and the IRS will announce this week an extension of the April 15 deadline by as much as 90 days, and a waiver of penalties and interest for most taxpayers. Additionally, Treasury and the IRS are aware of the major deadline for businesses tomorrow, March 16, and the challenges facing taxpayers and tax preparers in meeting that deadline. They have indicated that they would be generous in determining reasonable cause abatement of any penalties for taxpayers and tax preparers unable to file in a timely manner.”

March 13 at 3 pm ET:Per Tax Talks, “President Trump declared a national emergency under the Robert T. Stafford Disaster Relief and Emergency Assistance Act in response to the coronavirus. This declaration allows the Treasury Department and the IRS to extend the deadline for certain taxpayers and small businesses to pay taxes until December 31, 2020 as Treasury Secretary Steven Mnuchin suggested earlier this week.”

Per Bloomberg Law News (with this declaration), “The IRS can choose from a range of powers: abating penalties for failing to file or pay taxes, or postponing federal tax filing and payment deadlines without interest or penalties accruing, according to the agency’s Internal Revenue Manual posted on its website.”

March 13 at 1 pm ET: The president willprobably use federal emergency powers today to direct the Treasury Department to providetax filing and late payment relief.I hope the Treasury Department considers theAICPA proposals. (See theAICPA coronavirus resource centerand theAICPAstate filing conformity chartthat they will update.)

The original blog post,dated March 12, 2020:

The Administration and Congressional leaders are negotiating stimulus measures to provide relief for the coronavirus pandemic,which might include loosening rules for the April 15 tax deadline.

In hisOval Office speech on March 11, the president proposed tax-payment relief for “certain individuals and businesses.” That might be too narrow, and hopefully, this relief will apply to all taxpayers since the virus is spreading fast around the county and causing wide-spread economic harm. Itwould be challenging to identify “federallydeclareddisaster areas” eligible for tax relief. Blanket across the board tax relief iswarranted. Treasury Secretary Mnuchinsaid the delay would cover “virtually all Americans other than the super-rich.”

Under current law, individual taxpayers must file 2019 income tax returns or an automatic extension form 4868 by April 15, 2020. An extension filing delays thisfor six months (Oct. 15). However, the IRS and states want taxpayers to make 2019 tax payments on time by April 15, 2020. The IRS uses a complicated regime of penalties and interest charges to incentivize taxpayers to make tax payments by April 15.

If a taxpayer misses the April 15 deadline, the IRS charges them a “late-filing penalty” of 5% per month, up to a maximum of five months for a total penalty of 25%. It would be unconscionable for the IRS to charge a coronavirus victim such a hefty penalty because they couldn’t file a one-page extension on time. I expect that IRS relief should make this automatic extension genuinely “automatic” by doing away with a requirement to submit a form 4868.

The IRS “late-payment penalty” addresses when a taxpayer should make tax payments that are due. IRS coronavirus reliefshould loosen the late-penalty rules, too. Under current law, the IRS would charge a late-payment penalty if the taxpayer did not pay at least 90% of their tax liability by April 15. The late-payment penalty is 0.5% per month, up to five months for a maximum of 2.5%. The IRS allows the taxpayer to request abatement oflate-payment and late-filing penalties based on a “reasonable cause.” Contracting coronavirus sounds like a reasonable cause. The IRS calculates penalties and interest based on the tax payment paid after April 15. The current interest rate on late payments is 4.5%.

Hopefully, states follow suit with the IRS and enact coordinated tax relief over the April 15 deadline. States might use a different payment percentage to avoid late-payment penalties.

Accounting industry group weighs in
The AICPA issued a press release AICPA Calls for Indiv. & Business Tax Relief Amid Coronavirus Pandemic, dated March 11, 2020. My partner Darren Neuschwander CPA serves on the AICPA Individual & Self-Employed Tax Technical Resource Panel and helped draft this AICPA letter. (Darren will be serving as the vice-chair of the panel effective May 21, 2020, for the 2020-2021 year.)

The AICPA letter recommended an automatic extension for all taxpayers, without having to submit form 4868. The AICPA also suggested reducing the 90% payment rule to 70%, figuring the IRS might then provide the relief to all taxpayers. The AICPA letter further recommends: “Waive interest through October 15, 2020; and waive underpayment penalties for 2020 estimated tax payments if paid by September 15, 2020.” See the letter for their other recommendations.

On CNBC this morning, Jim Cramer called for tax payment relief across the board for all taxpayers and businesses. It seems the public and media’s first impression of this story is that no tax payments will be due April 15 with an automatic extensionand 100% relief for interest and all types of penalties. The fine print of the penalty regime has always been confusing to many. Let’s wait to see the final tax law changes if any.

Special issues for traders
A 2020 Section 475 election is due by April 15 for individual traders eligible for trader tax status (TTS). (It’s March 16 for existing partnerships and S-Corps.) The election procedure requires a taxpayer to attach a 2020 Section 475 election statement to their 2019 tax return or extension filing made by the April 15, 2020 deadline. The IRS might allow an automatic extension, orit could extend the filing date altogether. However, I don’t expect the IRS to address 475 elections specifically. Therefore, it’s safer to mail the IRS a Form 4868 automatic extension and staple the election statement to it by April 15, 2020, according to current law. Alternatively, file a complete 2019 tax returnand include the 475 election by April 15. This year traders are counting on a 475 election to convert year-to-date capital losses into ordinary losses due to massive volatility in Q1 2020. (See Massive Market Losses? Elect 475 For Enormous Tax Savings.)

It’s worth noting that the late-payment penalty is small and sort of like a margin loan; a maximum amount of 2.5% isn’t that bad for six months’ use of money.

If you do choose to postpone tax payments, be careful not torisk your tax funds owed the IRS in the financial markets as thatmight compound your cash flow problems.

This tax relief is like interest forbearance where banks allow a delay in mortgage payments, which many financial institutions offered to do in this crisis. It’s time for the U.S. Treasury to provide tax-payment forbearance, too.

See our blog post on extensions from last yearTax Extensions: 12 Tips To Save You Money.

Please share thisblog post with Administration and Congressional leaders.

Darren Neuschwander, CPA, contributed to this blog post.