Q & A with Prof. Shuldiner on Notice 2020-18 delaying federal income tax returns and payments
On March 20, 2020, the Department of the Treasury and the Internal Revenue Service (IRS) issued Notice 2020-18, Relief for Taxpayers Affected by Ongoing Coronavirus Disease 2019 Pandemic, which allows for the delay of filing and paying federal income taxes, including self-employment taxes. Here, federal income tax law expert and Alvin L. Snowiss Professor of Law Reed Shuldiner parses out the language of the notice to provide a clear statement of the announced changes to tax filing and payment rules.
Professor Shuldiner is also Deputy Dean and Co-Director of the Law School’s Center for Tax Law and Policy.
As with all tax issues, please consult your personal tax adviser regarding your specific situation.
Office of Communications: What does this notice mean practically for U.S. taxpayers?
Professor Shuldiner: The Notice covers “any person with a Federal income tax payment or a Federal income tax return due April 15, 2020” and provides 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.” There is no requirement to file for an extension of time to make use of the July 15th deadline.
Office of Communications: Will there be interest and penalties if taxpayers wait until July 15th to file and pay taxes due?
Professor Shuldiner: No, “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 file the Federal income tax returns or to pay the Federal income taxes postponed by this notice. Interest penalties, and additions to tax with respect to postponed Federal income tax filings and payments will begin to accrue on July 16, 2020.”
Office of Communications: Are other tax filings affected?
Professor Shuldiner: The Notice states, “No extension is provided … for the payment or deposit of any other type of Federal tax, or for the filing of any Federal information return.” Thus, e.g., if you file an information return for household help, there appears to be no delay in the filing requirement.
Office of Communications: Are refunds affected?
Professor Shuldiner: If you are owed a refund, at least for now the IRS is continuing to process returns and is providing refunds. Of course, circumstances are changing all the time. I would think electronically filed returns are more likely to be processed quickly than paper returns.
Office of Communications: What about state income taxes?
Professor Shuldiner: That issue will be determined on a state-by-state basis. The Pennsylvania Department of Revenue has announced the extension of the filing and payment deadline of state taxes until July 15, 2020. Many states automatically grant an extension to file a return when you have a federal extension, and presumably such a rule would apply in these circumstances, but even in those cases, that may not also apply to payments. Hopefully all state revenue departments will issue clear statements.
For the most current information on the Law School’s response to the novel coronavirus (COVID-19), please visit: https://www.law.upenn.edu/coronavirus/.