July 15 is the New April 15 – This Year

by Brenden Healy, CPA

April 15 has come and gone, nearly unnoticed. For the first time in forever, it was not Tax Day this year, as both the federal and state governments have delayed until July 15 the deadline for tax payments covering calendar year 2019.

The IRS and the U.S. Treasury Department initially made a series of announcements to provide tax relief in the wake of the coronavirus (COVID-19) pandemic. After previously announcing that taxpayers could defer making federal income tax payments up to certain limits for three months, the IRS subsequently announced that taxpayers can postpone payments without penalties or interest “regardless of the amount.”

According to the IRS, any person with a federal income tax return or payment due on April 15, 2020, has until July 15, 2020, to file a return or make their payment. Specifically, a “person” includes an individual taxpayer, trust, estate, partnership, association, company or corporation.

“any person with a federal income tax return or payment due on April 15, 2020, has until July 15, 2020, to file a return or make their payment”

Taxpayers can defer payment of federal income tax (including any self-employment tax) owed for the 2019 tax year from the normal April 15 deadline until July 15. They can also defer their first and second quarterly estimated income tax payments for the 2020 tax year (also including any self-employment tax) until July 15.

Previously, the IRS had issued guidance (in Notice 2020-17) stating that corporations could postpone tax payments up to $10 million and all other taxpayers could postpone payments up to $1 million without penalties or interest. In Notice 2020-18, the IRS now states: “There is no limitation on the amount of the payment that may be postponed.”

Normally, when you file for an individual income tax return extension, your tax return is extended until October 15. But you must still make a good-faith estimate of your tax liability and, by the filing deadline, pay the full amount estimated to be due. Taxpayers don’t need to file any additional forms to qualify for this automatic federal tax filing and payment relief to July 15.  However, if you need additional time to file beyond the July 15th due date, you will need to file for an extension and pay any projected tax due for the 2019 tax year in order to protect yourself from interest and penalties.

“if you’re due a refund, you probably still want to file your income tax return as soon as possible so you can receive your money”

On the other hand, if you’re due a refund, you probably still want to file your income tax return as soon as possible so you can receive your money. The IRS stated that “most tax refunds are still being issued within 21 days.”

The Connecticut Department of Revenue Services (DRS) has also moved the filing and payment deadline for personal income tax returns out 90 days, to July 15, 2020. This due date change also applies to Connecticut estimated income tax payments for the first and second quarters for 2020 (which would normally have been due on April 15 and June 15, respectively). 

What to do between now and the new, July 15th deadline?

We recommend that you have your 2019 tax returns completed as soon as possible. July 15 is less than 3 months away and it is important to plan for any taxes due to the IRS. Remember that the IRS and Connecticut will be looking for any remaining tax due with the 2019 tax returns, plus the 1st and 2nd quarter 2020 estimated tax payments – all on July 15th.

For some, that will be a large amount of money and it is imperative that you plan for this potential cash outlay as soon as possible. Or, if you will be receiving a refund from the government, you might as well get the refund request started.

We are living through an unprecedented time in our history with our personal lives and our financial future. Please stay safe, stay close to your family, and even stay close to your accountant. While we stay at home in quarantine, now is the best time to finish your 2019 tax return and plan for tax payments due in 2020.

Brenden Healy, CPA, is Partner in Charge of Tax at Whittlesey. With over 20 years of experience in public accounting, he is a tax expert who consults with businesses and individuals, and focuses his practice on closely held businesses in the real estate, manufacturing and distribution, and retail industries and nonprofit organizations. Brenden holds a Bachelor of Science degree in Accounting from Central Connecticut State University and a Master of Science degree in Taxation from the University of Hartford. A licensed Certified Public Accountant in the State of Connecticut, he is an active member of the American Institute of Certified Public Accountants (AICPA) and the Connecticut Society of Certified Public Accountants (CTCPA).