U.S. Tax Payments Delayed for 90 Days

The U.S. government has postponed the tax payment deadline for both individuals and corporations. As of now, however, it has not changed the 15 April deadline for individual income tax filings.

U.S. Treasury Secretary Steven Mnuchin on Tuesday, 17 March, announced that required tax payments for both individuals and corporations can be delayed for 90 days as a relief measure due to the ongoing Covid-19 pandemic. The announcement was followed on Wednesday, 18 March, with Notice 2020-17 from the Internal Revenue Service further explaining the relief. See https://www.irs.gov/pub/irs-drop/n-20-17.pdf.

The relief will apply to income tax payments up to $1 million for individuals and non-corporate tax filers, and corporate income tax payments up to $10 million.  No payments that would have been required on 15 April need be made until 15 July.  The $1 million limit applies to individuals whether they are filing as single or married filing a joint return.

The announcement and Notice do not delay the required filing of returns, which for individuals remain due on 15 April, and the Treasury Secretary encouraged taxpayers to file those returns on time.  Refunds will not be affected.

Although tax return preparers and tax professionals have urged the IRS to delay the filing period as well, it does not appear that that will happen.

Although the original announcement was unclear whether the relief is only for income tax payments, or would also include payroll tax payments such as withheld taxes or required FICA and Medicare tax, the Notice makes clear that the latter types of taxes are not eligible for relief. The relief will apply to estimated tax payments due 15 April, but it is not clear whether relief would also apply to required 15 June estimated tax payments for individuals.

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How This Impacts Mobility

Mobile employees will get some time to make tax payments during what is already a very stressful time for them. Unfortunately, unless they obtain extensions to file, employees will still have to calculate 2019 taxes and file returns on 15 April, although immediate payment of tax due will not be required until 15 July. Worldwide ERC® members will still need to provide by 15 April whatever return filing assistance they normally provide if questions arise as to relocation issues. Nor will Worldwide ERC® member companies be able to defer payment of withheld taxes, including those due to gross-ups.

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