Tax Law Insights

In response to the COVID-19 Coronavirus pandemic, Treasury Secretary Steven Mnuchin announced Tuesday that Americans will have until July 15th to pay their 2019 federal income taxes – and without late payment penalties or interest during this extended payment due date.  No special filing with the IRS is required for this payment extension.  The announced payment extensions are limited, however.  Individuals can defer payment of up to $1 million in taxes, and corporations can defer payment of up to $10 million, and without penalties or interest.  Individuals and businesses with 2019 income tax liabilities in excess of these amounts are presumably subject to late-payment and potentially other penalties for tax balances that may exceed these amounts.  No extension on making estimated tax payments was announced, and estimated tax payments are presumably due as before on the required payment dates.

The payment extension announced for the IRS is not a tax return filing date extension.  Treasury Secretary Mnuchin encouraged all individuals to file their 2019 income tax returns by April 15th, and especially if a taxpayer is seeking a refund.

With the IRS announcement, states are expected to follow suit, and to announce their own extended payments dates.    These expected announcements may be state-specific, may have different extension dates and other requirements, and should be considered by a taxpayer.   For example, the South Carolina Department of Revenue announced Tuesday, through SC Information Letter #20-3, that all South Carolina tax filing and payment deadlines starting on April 1, 2020 have been extended to June 1, 2020.  Penalties and interest are waived by SCDOR during this period.  This includes not only state income taxes, but also sales taxes, admission taxes, and other taxes administered by SCDOR.

Individuals and businesses are encouraged to carefully monitor IRS and applicable state announcements for more information in the coming days and weeks.