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IT’S TIME TO FILE YOUR TAX RETURNS!

On June 29, 2020, the Internal Revenue Service announced that the tax filing deadline of July 15 will not be postponed. Thus, individuals, trusts, estates, C-corporations, and others with an April 15 deadline who filed for an extension on or before July 15, 2020 will have until October 15 to file their tax returns. Please note that the extension only provides additional time to file one’s tax return and is not an extension for making tax payments.

With respect to calendar year taxpayers, such as Partnerships, LLCs, and other entities who file forms 1065, 1066, and/or form 1120-S with a March 15 deadline, the extension to file is available until September 15. The IRS also assesses a late filing penalty for Schedule K-1. The late filing penalty is $195 for each month or part of a month that the tax return has not been filed. The amount is multiplied by the total number of partners in the entity but is limited to 12 months. The month ends when a tax return is received by the IRS on or before the 15th.

Internal Revenue Commissioner, Chuck Rettig, stated the following with regard to the July 15 tax payment deadline: “The IRS understands that those affected by the coronavirus may not be able to pay their balances in full by July 15, but we have many payment options to help taxpayers. These easy-to-use payment options are available on IRS.gov, and most can be done automatically without reaching out to an IRS representative.”

For taxpayers who face financial hardship and are unable to pay their taxes in full, the IRS recommends that they act as quickly as possible to avoid the accrual of interest and penalties.

The IRS has made several payment options available on IRS.gov/payments, including the possibility of reduced penalties, to help taxpayers pay their tax dues. Please note that interest and late-payment penalties continue to accrue on any unpaid taxes after July 15. Failure to file and pay penalties will be charged if a tax return is not filed on time, and if tax dues are not paid by the due date. However, for taxpayers who have set up installment agreements, the failure to pay penalty rate of 0.5% per month is cut in half to 0.25% effective July 1, 2020. The interest rate for underpayment remains at 3%.

Please be aware that taxpayers are also required to make quarterly estimated tax payments on time. The first and second payments were due on July 15, third on September 15, and the fourth and final payment due on January 15, 2021. Taxpayers may be charged a penalty for not paying their estimated taxes, or for paying them late.

It is important to note that the filing deadlines and relief of payment options apply only to federal income tax returns. The IRS advises that taxpayers check with their state tax agencies for state filing and payment deadlines.

Please also note that since the situation is still developing, new information may become available at any time that affects the information provided above.

Please be aware that it is our firm’s policy to have all necessary documents at least 15 days prior to the filing deadline in order to prepare your tax return on time. Otherwise we cannot guarantee timely filing of your return.

Written by: Ani Hovhannisyan and Rachel Wright of AB FinWright LLP

Source: IRS.gov/newsroom