To our valued clients,
Extension of "time to pay" Income Tax
On March 17th, the US Treasury announced a 90-day extension of “time to pay” taxes owed for many taxpayers. Yesterday the IRS provided some guidance as to what was included in the “time to pay” extension.
What is covered in the 90-day extension of time to pay?
- The relief is available for income tax payments due April 15, 2020. This includes federal estimated tax payments due April 15, 2020.
- Non-corporate taxpayers can defer up to $1,000,000 of tax liability until July 15th, this includes both 2019 and 1st quarter 2020 tax payments combined.
- For an individual return, the amount of deferred tax payment is $1,000,000 regardless of filing status. Therefore, a tax deferment amount is the same for a single individual and for married individuals filing a joint return.
- The deferment includes payments of tax on self-employed income
- Corporations can defer up to $10,000,000 of tax liability until July 15th, this includes both 2019 and 1st quarter 2020 tax combined.
- The extension of time to pay includes only income tax payments. It currently does not cover an extension of time to file income tax returns.
What about states?
- State filing and payment obligations are not covered by the IRS guidance. Each state is addressing filing and payment obligations at the individual state level. Alabama has released its intentions to follow Federal guidelines. We will keep you updated on this.
What does this mean for you?
- We are still recommending that you provide information to us as soon as it is available to assure that anyone getting a refund can file and receive money back and that those with tax due can execute a “time to file” extension and get an accurate picture of what will be due come July 15th.
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Best Regards,
Martin D. Williams, CPA,
Managing Partner
Machen McChesney, LLP
