On March 20, the Internal Revenue Service (IRS) announced
that tax returns due April 15 will not have to be filed until July 15 this
year. In addition, the upcoming April 15 deadline for making tax payments
will also be postponed to July 15, 2020.
In New Jersey, the Legislature has passed a bill extending the state filing deadline for income tax or corporation business tax returns; however, Gov. Phil Murphy has not yet signed it. Lawmakers are also calling Gov. Murphy and Treasurer Elizabeth Muoio to postpone the filing deadline for all state tax returns until July 15 in accordance with the federal tax deadline extension.
Federal COVID-19 Tax Relief
On March 20, the IRS issued Notice 2020-18, which
provide guidance on the federal tax delay. The Notice states that any
“individual, a trust, estate, partnership, association, company or corporation”
with a federal income tax return or income tax payment due on April 15 receives
an automatic postponement of that deadline until July 15. Notably, taxpayers do
not have to file Form 4868, “Application for Automatic Extension of Time
to File U.S. Individual Income Tax Return,” or Form 7004, “Application for
Automatic Extension of Time to File Certain Business Income Tax, Information,
and Other Returns.”
There is no
limitation on the amount of the payment that may be postponed. In a prior
notice, the IRS had stated that C corporations and consolidated groups could postpone up to
$10 million in tax payments under the COVID-19 tax relief, while all other
taxpayers could delay up to $1 million in tax payments. As set forth in Notice 2020-18, no
interest, penalty, or addition to tax for failure to file a federal income tax
return or to pay federal income taxes will accrue between April 15, 2020, and
July 15, 2020, for any return or payment postponed.
The federal tax delay only applies to federal income tax
returns and payments (including self-employment tax payments) due April 15,
2020, for 2019 tax years and estimated income tax payments due April 15, 2020,
for 2020 tax years. The Notice expressly states that it does not apply to any
other type of federal tax or to any federal information returns.
New Jersey COVID-19 Tax Relief
The New Jersey Legislature has passed legislation extending
the New Jersey business tax filing deadline to June 30, 2020. The bill
now awaits Gov. Phil Murphy’s signature.
The bill (A-3841) automatically
extends the time to file a gross income tax or corporation business tax return
if the IRS extends the filing or payment due date for federal returns. It also
automatically grants an extension for those taxpayers if the federal government
grants an extension and would not impose penalties or interest if the taxpayer
files a return by the end of the extension. The extended due date would be
no later than June 30, 2020.
What’s Next?
The impact of COVID-19 on federal and state tax filings and
payments will likely continue to evolve. Please check back for updates.
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