Late in the evening on Friday, March 20, 2020, the Treasury Department and the IRS issued Notice 2020-18, restating and expanding relief provided in Notice 2020-17. Notice 2020-18 provides guidance on how Affected Taxpayers can defer tax filings AND tax payments due to the coronavirus (COVID-19). The term “person” includes an individual, a trust, estate, partnership, association, company or corporation, as provided in section 7701(a)(1) of the Code. For an Affected Taxpayer, the due date for filing Federal income tax returns and making Federal income tax payments due April 15, 2020, is automatically postponed to July 15, 2020. Affected Taxpayers do not have to file Forms 4868 or 7004. Another significant change is there is no limitation on the amount of the payment that may be postponed. As you may recall the previous release limited the amount of payment deferral to $1,000,000 for individuals and $10,000,000 for corporations.

The relief provided in this section III is available solely with respect to Federal income tax payments (including payments of tax on self-employment income) and Federal income tax returns due on April 15, 2020, in respect of an Affected Taxpayer’s 2019 taxable year, and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for an Affected Taxpayer’s 2020 taxable year.

IMPORTANT NOTE – This does not provide deferral or relief for Affected Taxpayer’s second quarter 2020 estimated tax payment normally due June 15, 2020.

Link to IRS Notice 2020-18:

Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic Notice 2020-18

IMPORTANT NOTE – Many states and local municipalities are simultaneously providing, or have already provided, their own relief.

Link to AICPA State Tax Filing Guidance for Coronavirus Pandemic:

State Tax Filing Guidance for Caronavirus Pandemic – Update 3/20/20 – 12 noon et.

As always we appreciate the opportunity to serve you. If you have any questions or if we may be of any assistance to you please do not hesitate to contact us directly.

Treasury has released insight on the deferral of the payment of any tax due on April 15, 2020. The due date for making Federal income (and individual SE Tax Payments) due April 15, 2020 will be postponed to July 15, 2020. C Corporations and consolidated groups can defer up to $10,000,000 in tax. For all other taxpayers the deferral is up to $1,000,000. This is also good for estimated tax payments due April 15, 2020.

Yesterday afternoon the United States Treasury issued Notice 2020-17 Relief for Taxpayers Affected by Ongoing Disease 2019 Pandemic.  Notice 2020-17 provides some payment relief to US taxpayers.  This notice provides insight on the deferral of the payment of any tax due on April 15, 2020.  The due date for making Federal income (and individual SE Tax Payments) due April 15, 2020 will be postponed to July 15, 2020.  C Corporations and consolidated groups can defer up to $10,000,000 in tax.  For all other taxpayers (i.e. individuals, trusts, etc.) the deferral is up to $1,000,000.  This is also good for estimated tax payments due April 15, 2020.  This is a deferral of time to pay, NOT and extension of time to file.  All taxpayers will have to file or extend their returns as normal.

Here is a link to a copy of this notice so you can see the full release.

Notice 2020-17 Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic

While we know many of you may want to push back the payment of taxes until July 15, you may prefer to complete at least a draft of your return so you know what liability lies ahead.  Your DRDA team will continue to work towards the completion, or extension, of your tax return as if this change had not been made.  Many of you will want to “get the tax filing process off your plate” and complete the process as usual and file and pay what is due by April 15.  The financial impact of filing and paying by April 15 is generally minimal as the funds for the tax payment are likely already sitting in cash and will earn very little, given today’s interest rate environment, between April 15 and July 15.  We also know some of you will not want to send a payment until absolutely the latest date possible.  In these cases, we will finalize and then extend the return so that that payment can be made in July.  Our goal is to provide flexibility and service to you while managing our workflow in the most normalized manner possible.  The growing fear is the bubble of work that may be looming in June and July if everyone delays the preparation of their returns.  As such we encourage you to get your information to us if you have not already done so.  We definitely live in interesting times and want to serve you well as we work through all of this.

In Congress’ haste to push tax reform through in late 2017 they unfairly (some say) eliminated the deduction for employee business expenses through 2025. The suspension of this deduction negatively affected taxpayers across many different occupations – first responders, school teachers, military personnel, transportation workers, construction workers and others.

Well, there may be good news on the horizon for these taxpayers. As first reported by Alan Viard of TheHill.com there has been legislation introduced in Congress by Democratic Senator Bob Casey (S.2718) and Democratic Representative Conor Lamb (H.R. 2103) to bring back the employee business expense deduction. This would bring individual tax reform more in line with corporate and small business/self-employed reform that was passed by Congress as part of the Tax Cuts and Jobs Act of 2017 (TCJA).

TCJA did a good job of bringing much needed reform to our corporate tax structure. It did a fair job of reforming the part of the tax code that applies to small businesses and the self-employed. However, it fell short of what was needed for individual tax reform. I use the following analogy to describe the recent effort at tax reform — corporate tax reform was a stand-up triple, small business and self-employed tax reform was a stand-up double and individuals made it to first base, but they got there by being hit by the pitch. Congress had a once in a generation opportunity to make meaningful change to our tax code and they fell short when considering the effect on individuals.

In his article in The Hill, Alan Viard does a good job describing the inequity caused by the elimination of the deduction for employee business expenses. Businesses can rightly deduct the costs associated with generating revenue. Why can individuals no longer do the same thing? As Viard points out, this violates a very fundamental rule of fair tax policy. Fair tax policy should always be applied consistently and in this case it is not. An individual should be able to deduct the costs they incur to earn their wages. (See Viard’s full article at The Hill)

Effective and fair tax reform seemed within reach as Congress worked diligently on TCJA during 2017. The consensus among most experts was that Congress would pass a meaningful, generational reform package in 2018 once their work was completed. However, as often happens, political expediency got in the way of Congress finishing their job.

Congress was successful in effecting much needed and meaningful tax reform for corporate and small businesses with passage of TCJA. They need to finish the job for individual workers. They have another opportunity to correct their mistake and apply consistent and fair tax policy across all classes of taxpayers. It looks like they may be getting started on that effort. DRDA CPA’s will continue to monitor this important piece of legislation and keep you informed of its progress.

You may contact Senator Bob Casey at Senator Casey and Representative Conor Lamb at Rep. Lamb to weigh in on this important pending legislation. You may contact the author, Larry Lonero, E.A, at larry@DRDACPA.com and DRDA CPA’s at (281) 488-2022 or www.DRDACPA.com.