News from the IRS: Tax Filing and Payment Relief as a Result of COVID-19

March 26, 2020

 

The IRS is stepping in to help taxpayers as a result of the pandemic caused by the COVID-19 virus1. To the relief of many, the due date for 2019 federal tax filing, and payment of any income taxes due, is now July 15, 2020. This extension also applies to any first-quarter 2020 estimated income-tax payments. The details of this extension are in IRS Notice 2020-18, which now supersedes Notice 2020-17.

The global pandemic caused by the COVID-19 virus has created liquidity challenges. As most taxpayers are well aware, the IRS is not very forgiving when a payment is missed. In the current economically stressed environment, some taxpayers were facing a difficult choice—pay for the mortgage, rent, and/or other necessary expenses, or pay the IRS. The 90-day delay for tax filing and payment of income taxes due allows those funds to be available in the short term.

 

How does the IRS extension work?

In the Notice, the IRS extends the due date for 2019 federal tax filing and payment of 2019 income taxes, plus first quarter 2020 estimated income taxes, to July 15, 2020. Taxpayers who file their income tax return or request an extension, and make income-tax payments on or before July 15, 2020 will not begin to accrue penalties and interest until July 16, 2020.

At this time, there is no additional form or notice required for those filing between April 15, 2020, and July 15, 2020.

 

Who is eligible for the extension? How much of their tax bill is covered?

  • Individuals, including self-employed individuals
  • Entities, such as trusts or estates
  • C Corporations

In a new release on March 21, 2020, the IRS announced that the Notices cover any income-tax liability amount. This removed the earlier caps on payments.

 

Alert: – State, county, and municipal tax-payment deadlines may not change!

Clients should check with their states and local tax jurisdictions. And remember that states and other local jurisdictions may have different rules for tax-filing extensions as well.

This information is important to both financial professionals and their clients. A quick update can benefit many clients, especially small-business owners. This also might be a great time to help a client address other concerns, such as having a floor under their retirement savings accounts.

For additional information about IRS Notices 2020-17 and 2020-18, and the 90-day extension, please contact the Retirement Strategies Group at (800) 722-2333, or email us at RSG@PacificLife.com.

 

1The common term used for the SARS-CoV-19 virus, a betacoronavirus similar to the SARS-type virus.

 


Attachments/Links 

Picture of Pacific Life Annuities

Pacific Life offers a broad and diversified range of products and solutions designed to help individuals and families achieve asset growth, sustainable retirement income, and long-term financial independence. We also help businesses manage and fulfill their long-term retirement plan commitments to employees.

Pacific Life, its distributors, and respective representatives do not provide tax, accounting, or legal advice. Any taxpayer should seek advice based on the taxpayer's particular circumstances from an independent tax advisor or attorney.

Pacific Life is a product provider. It is not a fiduciary and therefore does not give advice or make recommendations regarding insurance or investment products.

Pacific Life refers to Pacific Life Insurance Company and its affiliates, including Pacific Life & Annuity Company. Insurance products are issued by Pacific Life Insurance Company in all states except New York and in New York by Pacific Life & Annuity Company. Product availability and features may vary by state. Each insurance company is solely responsible for the financial obligations accruing under the products it issues. 

Variable insurance products are distributed by Pacific Select Distributors, LLC (member FINRA & SIPC), a subsidiary of Pacific Life Insurance Company (Newport Beach, CA) and an affiliate of Pacific Life & Annuity Company. Variable and fixed annuity products are available through licensed third parties.

No bank guarantee • Not a deposit • Not FDIC/NCUA insured • May lose value • Not insured by any federal government agency

For financial professional use only. Not for use with the public.