IRS sets July 15 due date, ends payment relief cap

Man working from homeThe IRS has issued new guidance (Notice 2020-18) in response to the COVID-19 pandemic postponing the April 15 filing deadline for federal income tax returns until July 15 and removing the cap on payment relief for federal income tax payments and estimated taxes due on April 15.

Notice 2020-18 supersedes Notice 2020-17, which had not provided any actual filing relief and had capped payment relief at $10 million for corporations and $1 million for individuals. The relief provided under Notice 2020-18 comes in response to intense pressure for the Trump Administration to expand relief and was issued hours after Treasury Secretary Steven Mnuchin tweeted that he was “moving Tax Day from April 15 to July 15.” However, the new relief is still limited in many ways and the IRS is likely to remain under pressure to expand it. Congress could also provide statutory relief in the stimulus legislation currently under consideration.

Notice 2020-18 provides relief solely for federal income tax returns and income tax payments for the 2019 taxable year that are due on April 15 and estimated income tax payment for the 2020 tax year due on April 15. The due dates for these returns and payments are automatically postponed to July 15. Interest, penalties, and any other additions to tax for late filings or payments will begin to accrue on July 16. The relief applies to a “person” consistent with Section 7701(a)(1), which includes an individual, trust, estate, partnership, association, company or corporation.

Because the relief is limited only to income tax returns and income and estimated tax payments due specifically on April 15, it provides no relief for returns or payments with an alternate due date, such as for fiscal year taxpayers. In addition, because the relief for the income tax returns and payments is limited to the “2019 taxable year,” it does not appear to apply to fiscal year filers that previously extended the due date for filing an income tax return until April 15, 2020, unless additional guidance from the IRS provides otherwise. In the absence of further guidance, fiscal filers should file extensions in the ordinary course to ensure an extended filing period.

It also is unclear how automatic extensions are applied. Until and unless further guidance is issued, taxpayers wishing to extend their filing deadline to Oct. 15 should file a Form 7004 or 4868 by April 15 unless the IRS provides otherwise. As noted below, please be aware that federal relief does not automatically apply in all states to provide equivalent relief from state filing and payment obligations.

Notice 2020-18 also does not specifically address installments payments under Section 965. Under prior guidance issued by the IRS, the Section 965(a) liability is technically considered included in either the 2017 or 2018 tax year of the taxpayer. Taxpayers with a Section 965 inclusion that is paid in installments should plan to pay that installment by April 15 unless further guidance is issued by the IRS addressing this issue.

The IRS is under tremendous pressure to provide additional administrative relief, which remains possible. Notices 2020-17 and 2020-18 acknowledge that the postponement is based on the president’s declaration of a national emergency and that the authority to provide relief is found under Section 7508A. That provision enables the IRS to postpone many more required tax deadlines.

State relief The release of Notice 2020-18 is independent of the state and local income tax changes that will follow in response to COVID-19, including:
  • Changes to filing due dates and extensions
  • Adjustments to 2019 tax and 2020 estimated tax payment due dates /li>
  • Temporary relief from penalties and interest /li>

States and localities will be required to offer specific guidance on these issues, which may take days to weeks and may take the form of executive orders from state governors, adopted legislation or published notices released by state and local tax authorities. While some states and localities may mirror the federal relief provided, many states and localities could significantly depart from the policies adopted in Notice 2020-18. Likewise, with respect to state and local indirect tax filings and payments (including the sales and use tax, and the property tax), states and localities will need to rapidly issue special guidance to provide relief to taxpayers.

Next steps This notice gives taxpayers immediate assurance of relief for filings and payments covered by the guidance and will offer some short-term cash-flow flexibility. However, other tax payments and returns are not impacted by this guidance and so taxpayers should be prepared to timely pay such tax and file those returns.

For more information contact:
Dustin Stamper
Partner, Washington National Tax Office
T +1 202 861 4144

To learn more visit

Shamik Trivedi
Partner, Washington National Tax Office
T +1 202 521 1511

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