Income Tax Relief in Response to COVID-19 Outbreak

by Bridget Foreman, CPA | March 20, 2020

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On March 20, 2020, the IRS extended the federal tax filing deadline to July 15, 2020, three months after the normal April 15, 2020 deadline, to give all individuals and businesses an extra 90-day extension to file their returns. Published guidance is not available at this time.

In addition to the federal deadlines, California updated their relief provisions on March 18, 2020.

The details of the federal and California relief provisions are as follows:

FEDERAL

  • The filing deadline for all income tax returns originally due April 15, 2020 are due on July 15, 2020. Taxpayers may still file for extensions on these returns, and these extension requests must be filed by July 15, 2020 to be considered timely.
  • Taxpayers who have 2019 income tax payments due by April 15, 2020 have an automatic extension on payments until July 15, 2020.  
  • This penalty and interest relief is also applicable to first quarter 2020 income tax estimate payments, which are also traditionally due on April 15.
  • Note that this relief is only applicable to federal income tax payments. Other types of taxes are not included in this notice.
  • This extension is granted for all filing and payments of total tax due per taxpayer for individuals and entities, such as trust or estates, other than C Corporations. Taxpayers do not need to file any additional forms to qualify for this relief.
  • C-Corporations will have a similar income tax payment deadline extension to July 15, 2020 for amounts up to $10 million of total tax due.
  • Penalties and interest will begin accruing on unpaid amounts on July 15, 2020.


CALIFORNIA

On March 12, 2020, Governor Newsom signed an Executive Order and the California Franchise Tax Board announced special tax relief for California taxpayers affected by the COVID-19 pandemic. The details of this relief are as follows:
 

  • All taxpayers are granted an extension to file 2019 California income tax returns to July 15, 2020. No paperwork needs to be filed to take advantage of this relief, and this relief applies to all filings which have original deadlines between March 15, 2020 through June 15, 2020.
  • Payment deadlines have been moved to July 15, 2020 for all tax payments that occur on March 15, 2020 through June 15, 2020. This includes income tax payments of 2019 tax liabilities as well as first and second quarter estimates for 2020.


As guidance has not yet been issued from the U.S. Treasury in regards to the filing date extension, we still have some unanswered questions. In addition, most states (in addition to California), have either released their own relief provisions or are following federal guidance. We will continue to keep abreast of the changing environment and remain available to answer questions.

At Bartlett, Pringle & Wolf, LLP, we will personally reach out to each of our clients to determine how these relief provisions affect their situation. While the recent COVID-19 has brought wide-ranging uncertainty to each of us, we continue to work hard to meet compliance deadlines and find certainty in our unwavering commitment to help clients reach their goals.

Please contact your advisor at (805) 963-7811 should you have any immediate questions.