The President issued an emergency declaration on March 13, 2020 under the Robert T. Stafford Disaster Relief and Emergency Assistance Act in response to the ongoing COVID-19 pandemic. The Emergency Declaration instructed the Secretary of the Treasury “to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency, as appropriate.”

Section 7508A of the law provides the Secretary with authority to postpone the time for performing certain acts under the internal revenue laws for a taxpayer determined to be affected by a Federally declared disaster. Pursuant to Administrative Notice 2020-17, the Secretary of the Treasury has determined that any person with a Federal income tax payment due April 15, 2020, is affected by the COVID-19 emergency for purposes of relief.

For an “Affected Taxpayer” (this means anyone required to file), the due date for making Federal income tax payments due April 15, 2020, up to $10 million, is postponed to July 15, 2020. On Friday March 20, 2020, the Secretary of the Treasury also extended the regular April 15 filing deadline to July, 15, 2020 as well. The total for corporations filing consolidated returns is also limited to $10 million. The amount is the same for each C corporation that does not join in filing a consolidated return. For all other Affected Taxpayers (including individuals and other business entities), the Postponed Payment Amount is limited to $1 million regardless of filing status. For example, the amount is the same for a single individual and for married individuals filing a joint return; in both instances the limit is $1 million.

The relief provided is for Federal income tax payments only (including payments of tax on self-employment income), states will make their own adjustments as Oklahoma has provided similar relief, (a) due on April 15, 2020, for the taxpayer”s 2019 taxable year, and (b) Federal estimated income tax payments (including estimated tax payments of future self-employment income tax) due on April 15, 2020, for a taxpayer’s 2020 taxable year.

No extension is provided in this notice for the payment or deposit of any other type of Federal tax. This means that currently, there is no extension of time to make payroll tax deposits. However, it should be noted that a world-wide pandemic may give rise to a “reasonable cause” defense to other late filing and payment penalties for a taxpayer. Additionally, the extension of time to pay may open a compliance window for collection alternatives such as an installment agreement or offer in compromise that a taxpayer may not have otherwise been able to comply with because of an inability to pay on April 15.

The period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to pay the Federal income taxes postponed by the notice. Interest, penalties, and additions to tax will begin to accrue on July 16, 2020. In addition, interest, penalties and additions to tax will accrue, on any Federal income tax payments in excess of $10 million due but not paid by an Affected Taxpayer on April 15, 2020.

Oklahoma – The Oklahoma Tax Commission (OTC) unanimously voted to follow the Federal guidance regarding income tax payments only. In the near future, the OTC will likely extend the filing deadline to match the Federal extension announced today. Currently, the Oklahoma individual income tax filing deadline is still April 15. Oklahoma taxpayers may now also defer income tax payments until July 15, 2020 in the same amounts as the Federal limitations above. The deadlines for other types of tax payments, i.e. sales and withholding taxes, remain unchanged.

If you have questions about your individual tax circumstances, you should consult qualified tax counsel.

By Jeffrey D. Trevillion, Jr., jtrevillion@dsda.com