New York State: Pass-Through Entity Tax Law Article 24-A

The pass-through entity tax (PTET) under new Tax Law Article 24-A1 is an optional tax that partnerships or New York S corporations may annually elect to pay on certain income for tax years beginning on or after January 1, 2021.  If a partnership or New York S corporation elects to pay PTET, partners, members, or shareholders of an electing partnership or New York S corporation (“electing entity”) who are subject to tax under Article 22 may be eligible for a PTET credit on their New York State income tax returns.

The recent announcement from the New York State Tax Department (TSB-M-21(1)C, (1)I), provides more insights regarding the instructions and the mechanics. We expect several other states will soon roll-out a similar Technical Memorandum regarding the election. New York is one of many states to allow pass-through entities (PTET) the option to pay state income tax on behalf of the partners, members, or shareholders.  We can answer your questions to the possible tax benefits.  Please reach out to Spicer Jeffries LLP Tax Department to discuss your questions.

Read the ENTIRE New York State Department of Taxation and Finance Technical Memorandum (TSB-M-21(1)C, (1)1) here:

2020 Tax Letter to Clients

Dear Client,

Now, as year-end approaches, is a good time to think about planning moves that may help lower your tax bill for this year and possibly next. Year-end planning for 2020 takes place during the COVID-19 pandemic, which in addition to its devastating health and mortality impact has widely affected personal and business finances. New tax rules have been enacted to help mitigate the financial impact of the disease, some of which should be considered as part of this years’ planning, most notably elimination of required retirement plan distributions, and liberalized charitable deduction rules.

Major tax changes from recent years generally remain in place, including lower income tax rates, larger standard deductions, limited itemized deductions, elimination of personal exemptions, an increased child tax credit, and a lessened alternative minimum tax (AMT) for individuals; and a major corporate tax rate reduction and elimination of the corporate AMT, limits on interest deductions, and generous expensing and depreciation rules for businesses. And non-corporate taxpayers with certain income from pass-through entities may still be entitled to a valuable deduction.

Despite the lack of major year-over-year tax changes, the time-tested approach of deferring income and accelerating deductions to minimize taxes still works for many taxpayers, as does the bunching of expenses into this year or next to avoid restrictions and maximize deductions.

We have compiled a list of actions based on current tax rules that may help you save tax dollars if you act before year-end. Not all actions will apply in your particular situation, but you (or a family member) will likely benefit from many of them. We can narrow down the specific actions that you can take once we meet with you to tailor a particular plan. In the meantime, please review the following list and contact us at your earliest convenience so that we can advise you on which tax-saving moves to make:

Year-End Tax Planning Moves for Individuals

…Higher-income earners must be wary of the 3.8% surtax on certain unearned income. The surtax is 3.8% of the lesser of: (1) net investment income (NII), or (2) the excess of modified adjusted gross income (MAGI) over a threshold amount ($250,000 for joint filers or surviving spouses, $125,000 for a married individual filing a separate return, and $200,000 in any other case). As year-end nears, a taxpayer’s approach to minimizing or eliminating the 3.8% surtax will depend on his estimated MAGI and NII for the year. Some taxpayers should consider ways to minimize (e.g., through deferral) additional NII for the balance of the year, others should try to see if they can reduce MAGI other than NII, and other individuals will need to consider ways to minimize both NII and other types of MAGI. An important exception is that NII does not include distributions from IRAs and most other retirement plans.

… The 0.9% additional Medicare tax also may require higher-income earners to take year-end action. It applies to individuals whose employment wages and self-employment income total more than a threshold amount ($250,000 for joint filers, $125,000 for married couples filing separately, and $200,000 in any other case). Employers must withhold the additional Medicare tax from wages in excess of $200,000 regardless of filing status or other income. Self-employed persons must take it into account in figuring estimated tax. There could be situations where an employee may need to have more withheld toward the end of the year to cover the tax. For example, if an individual earns $200,000 from one employer during the first half of the year and a like amount from another employer during the balance of the year, he or she would owe the additional Medicare tax, but there would be no withholding by either employer for the additional Medicare tax since wages from each employer don’t exceed $200,000.

… Harvesting capital losses to offset capital gains but be careful. Purchasing substantially identical securities within 30 days before or after selling a position results in a wash sale and defers the loss.

… Long-term capital gain from sales of assets held for over one year is taxed at 0%, 15% or 20%, depending on the taxpayer’s taxable income. If you hold long-term appreciated-in-value assets, consider selling enough of them to generate long-term capital gains that can be sheltered by the 0% rate. The 0% rate generally applies to the excess of long-term capital gain over any short-term capital loss to the extent that, when added to regular taxable income, it is not more than the maximum zero rate amount (e.g. $80,000 for a married couple). If the 0% rate applies to long-term capital gains you took earlier this year for example, you are a joint filer who made a profit of $5,000 on the sale of stock held for more than one year and your other taxable income for 2020 is $75,000 then try not to sell assets yielding a capital loss before year-end, because the first $5,000 of those losses won’t yield a benefit this year. (It will offset $5,000 of capital gain that is already tax-free.)

…Postpone income until 2021 and accelerate deductions into 2020 if doing so will enable you to claim larger deductions, credits, and other tax breaks for 2020 that are phased out over varying levels of adjusted gross income (AGI). These include deductible IRA contributions, child tax credits, higher education tax credits, and deductions for student loan interest. Postponing income also is desirable for taxpayers who anticipate being in a lower tax bracket next year due to changed financial circumstances. Note, however, that in some cases, it may pay to actually accelerate income into 2020. For example, that may be the case for a person who will have a more favorable filing status this year than next (e.g., head of household versus individual filing status), or who expects to be in a higher tax bracket next year.

… If you believe a Roth IRA is better than a traditional IRA, consider converting traditional-IRA money invested in any beaten-down stocks (or mutual funds) into a Roth IRA in 2020 if eligible to do so. Keep in mind, however, that such a conversion will increase your AGI for 2020, and possibly reduce tax breaks geared to AGI (or modified AGI).

…It may be advantageous to try to arrange with your employer to defer, until early 2021, a bonus that may be coming your way. This could cut as well as defer your tax.

… Many taxpayers won’t be able to itemize because of the high basic standard deduction amounts that apply for 2020 ($24,800 for joint filers, $12,400 for singles and for marrieds filing separately, $18,650 for heads of household), and because many itemized deductions have been reduced or abolished. Like last year, no more than $10,000 of state and local taxes may be deducted miscellaneous itemized deductions (e.g., tax preparation fees and unreimbursed employee expenses) are not deductible; and personal casualty and theft losses are deductible only if they’re attributable to a federally declared disaster and only to the extent the $100-per-casualty and 10%-of-AGI limits are met. You can still itemize medical expenses but only to the extent they exceed 7.5% of your adjusted gross income, state and local taxes up to $10,000, your charitable contributions, plus interest deductions on a restricted amount of qualifying residence debt, but payments of those items won’t save taxes if they don’t cumulatively exceed the standard deduction for your filing status. Two COVID-related changes for 2020 may be relevant here: (1) Individuals may claim a $300 above-the-line deduction for cash charitable contributions on top of their standard deduction; and the percentage limit on charitable contributions has been raised from 60% of modified adjusted gross income (MAGI) to 100%.

…Some taxpayers may be able to work around these deduction restrictions by applying a bunching strategy to pull or push discretionary medical expenses and charitable contributions into the year where they will do some tax good. For example, a taxpayer who will be able to itemize deductions this year but not next will benefit by making two years’ worth of charitable contributions this year, instead of spreading out donations over 2020 and 2021. The COVIDrelated increase for 2020 in the income-based charitable deduction limit for cash contributions from 60% to 100% of MAGI assists in this bunching strategy, especially for higher income individuals with the means and disposition to make large charitable contributions.

…Consider using a credit card to pay deductible expenses before the end of the year. Doing so will increase your 2020 deductions even if you don’t pay your credit card bill until after the end of the year.

…If you expect to owe state and local income taxes when you file your return next year and you will be itemizing in 2020, consider asking your employer to increase withholding of state and local taxes (or pay estimated tax payments of state and local taxes) before year-end to pull the deduction of those taxes into 2020. But remember that state and local tax deductions are limited to $10,000 per year, so this strategy is not good to the extent it causes your 2020 state and local tax payments to exceed $10,000.

… Required minimum distributions (RMDs) that usually must be taken from an IRA or 401(k) plan (or other employer-sponsored retirement plan) have been waived for 2020. This includes RMDs that would have been required by April 1 if you hit age 70 ½ during 2019 (and for non-5% company owners over age 70 ½ who retired during 2019 after having deferred taking RMDs until April 1 following their year of retirement). So, if you don’t have a financial need to take a distribution in 2020, you don’t have to. Note that because of a recent law change, plan participants who turn 70 ½ in 2020 or later needn’t take required distributions for any year before the year in which they reach age 72.

… If you are age 70 ½ or older by the end of 2020, have traditional IRAs, and especially if you are unable to itemize your deductions, consider making 2020 charitable donations via qualified charitable distributions from your IRAs. These distributions are made directly to charities from your IRAs, and the amount of the contribution is neither included in your gross income nor deductible on Schedule A, Form 1040. However, you are still entitled to claim the entire standard deduction. (Previously, those who reached reach age 70 ½ during a year weren’t permitted to make contributions to a traditional IRA for that year or any later year. While that restriction no longer applies, the qualified charitable distribution amount must be reduced by contributions to an IRA that were deducted for any year in which the contributor was age 70 ½ or older, unless a previous qualified charitable distribution exclusion was reduced by that postage 70 ½ contribution.)

…If you are younger than age 70 ½ at the end of 2020, you anticipate that you will not itemize your deductions in later years when you are 70 ½ or older, and you don’t now have any traditional IRAs, establish and contribute as much as you can to one or more traditional IRAs in 2020. If these circumstances apply to you, except that you already have one or more traditional IRAs, make maximum contributions to one or more traditional IRAs in 2020. Then, in the year you reach age 70 ½, make your charitable donations by way of qualified charitable distributions from your IRA. Doing this will allow you, in effect, to convert nondeductible charitable contributions that you make in the year you turn 70 1/2 and later years, into deductible-in-2020 IRA contributions and reductions of gross income from later year distributions from the IRAs.

…Take an eligible rollover distribution from a qualified retirement plan before the end of 2020 if you are facing a penalty for underpayment of estimated tax and having your employer increase your withholding is unavailable or won’t sufficiently address the problem. Income tax will be withheld from the distribution and will be applied toward the taxes owed for 2020. You can then timely roll over the gross amount of the distribution, i.e., the net amount you received plus the amount of withheld tax, to a traditional IRA. No part of the distribution will be includible in income for 2020, but the withheld tax will be applied pro rata over the full 2020 tax year to reduce previous underpayments of estimated tax.

…Consider increasing the amount you set aside for next year in your employer’s health flexible spending account (FSA) if you set aside too little for this year and anticipate similar medical costs next year.

… If you become eligible in December of 2020 to make health savings account (HSA) contributions, you can make a full year’s worth of deductible HSA contributions for 2020.

…Make gifts sheltered by the annual gift tax exclusion before the end of the year if doing so may save gift and estate taxes. The exclusion applies to gifts of up to $15,000 made in 2020 to each of an unlimited number of individuals. You can’t carry over unused exclusions from one year to the next. Such transfers may save family income taxes where income-earning property is given to family members in lower income tax brackets who are not subject to the kiddie tax.

…If you were in federally declared disaster area, and you suffered uninsured or unreimbursed disaster-related losses, keep in mind you can choose to claim them either on the return for the year the loss occurred (in this instance, the 2020 return normally filed next year), or on the return for the prior year (2019), generating a quicker refund.

…If you were in a federally declared disaster area, you may want to settle an insurance or damage claim in 2020 in order to maximize your casualty loss deduction this year.

Year-End Tax-Planning Moves for Businesses &Business Owners

… Taxpayers other than corporations may be entitled to a deduction of up to 20% of their qualified business income. For 2020, if taxable income exceeds $326,600 for a married couple filing jointly, $163,300 for singles, marrieds filing separately, and heads of household, the deduction may be limited based on whether the taxpayer is engaged in a service-type trade or business (such as law, accounting, health, or consulting), the amount of W-2 wages paid by the trade or business, and/or the unadjusted basis of qualified property (such as machinery and equipment) held by the trade or business. The limitations are phased in; for example, the phasein applies to joint filers with taxable income between $326,600 and $426,600, and to all other filers with taxable income between $163,300 and $213,300.

…Taxpayers may be able to achieve significant savings with respect to this deduction, by deferring income or accelerating deductions so as to come under the dollar thresholds (or be subject to a smaller phaseout of the deduction) for 2020. Depending on their business model, taxpayers also may be able increase the new deduction by increasing W-2 wages before yearend. The rules are quite complex, so don’t make a move in this area without consulting your tax adviser.

… More small businesses are able to use the cash (as opposed to accrual) method of accounting in than were allowed to do so in earlier years. To qualify as a small business a taxpayer must, among other things, satisfy a gross receipts test. For 2020, the gross-receipts test is satisfied if, during a three-year testing period, average annual gross receipts don’t exceed $26 million (the dollar amount was $25 million for 2018, and for earlier years it was $1 million for most businesses). Cash method taxpayers may find it a lot easier to shift income, for example by holding off billings till next year or by accelerating expenses, for example, paying bills early or by making certain prepayments.

…Businesses should consider making expenditures that qualify for the liberalized business property expensing option. For tax years beginning in 2020, the expensing limit is $1,040,000, and the investment ceiling limit is $2,590,000. Expensing is generally available for most depreciable property (other than buildings) and off-the-shelf computer software. It is also available for qualified improvement property (generally, any interior improvement to a building’s interior, but not for enlargement of a building, elevators or escalators, or the internal structural framework), for roofs, and for HVAC, fire protection, alarm, and security systems. The generous dollar ceilings mean that many small and medium sized businesses that make timely purchases will be able to currently deduct most if not all their outlays for machinery and equipment. What’s more, the expensing deduction is not prorated for the time that the asset is in service during the year. The fact that the expensing deduction may be claimed in full (if you are otherwise eligible to take it) regardless of how long the property is in service during the year can be a potent tool for year-end tax planning. Thus, property acquired and placed in service in the last days of 2020, rather than at the beginning of 2021, can result in a full expensing deduction for 2020.

…Businesses also can claim a 100% bonus first year depreciation deduction for machinery and equipment bought used (with some exceptions) or new if purchased and placed in service this year, and for qualified improvement property, described above as related to the expensing deduction. The 100% write off is permitted without any proration based on the length of time that an asset is in service during the tax year. As a result, the 100% bonus first-year write off is available even if qualifying assets are in service for only a few days in 2020.

…Businesses may be able to take advantage of the de minimis safe harbor election (also known as the book-tax conformity election) to expense the costs of lower-cost assets and materials and supplies, assuming the costs don’t have to be capitalized under the Code Sec. 263A uniform capitalization (UNICAP) rules. To qualify for the election, the cost of a unit of property can’t exceed $5,000 if the taxpayer has an applicable financial statement (AFS; e.g., a certified audited financial statement along with an independent CPA’s report). If there’s no AFS, the cost of a unit of property can’t exceed $2,500. Where the UNICAP rules aren’t an issue, consider purchasing such qualifying items before the end of 2020.

…A corporation (other than a large corporation) that anticipates a small net operating loss (NOL) for 2020 (and substantial net income in 2021) may find it worthwhile to accelerate just enough of its 2021 income (or to defer just enough of its 2020 deductions) to create a small amount of net income for 2020. This will permit the corporation to base its 2021 estimated tax installments on the relatively small amount of income shown on its 2020 return, rather than having to pay estimated taxes based on 100% of its much larger 2021 taxable income.

…To reduce 2020 taxable income, consider deferring a debt-cancellation event until 2021.

…To reduce 2020 taxable income, consider disposing of a passive activity in 2020 if doing so will allow you to deduct suspended passive activity losses.

These are just some of the year-end steps that can be taken to save taxes. Again, by contacting us, we can tailor a particular plan that will work best for you.

Very truly yours,

Spicer Jeffries LLP

IRS REVIVES FORM 1099-NEC: Filing Begins With 2020 Tax Year

As a reminder, the IRS made changes to the 1099-MISC form by reviving the Form 1099-NEC.  Beginning with the 2020 tax year the new 1099-NEC form will be used for reporting nonemployee compensation (NEC) payments.  These payments were previously reported on Form 1099-MISC box 7 and will now be reported in Box 1 of Form 1099-NEC.

There are several parts of the new 1099-NEC form to take note of.

  • Box 1 is where you key in the dollar amount of nonemployee compensation.
  • Box 4 is used for any amount you held back to comply with backup withholding requirements.
  • Boxes 5-7 are used to report any state withholding.

What is nonemployee compensation?

The IRS defines nonemployee compensation (NEC) in the 2020 Instructions for Forms 1099-MISC and 1099-NEC.  If the following four conditions are met, you must generally report a payment as NEC. You made the payment to someone who is not your employee.

  • You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations).
  • You made the payment to an individual, partnership, estate, or, in some cases, a corporation.
  • You made payments to the payee of at least $600 during the year.

Examples of nonemployee compensation that are now reported in box 1 of Form 1099-NEC include:

  • Professional service fees, such as fees to attorneys (including corporations), accountants, architects, contractors, engineers, etc.
  • Payment for services, including payment for parts or materials used to perform the services if supplying the parts or materials was incidental to providing the service.
  • Director’s fees and other remuneration

Form 1099-NEC Other payments

In addition to nonemployee compensation, there are some other payments reported in box 1 of Form 1099-NEC.

  • Prizes and awards for services performed by nonemployees
  • Cash payments for fish
  • Payments by a federal executive agency for services
  • Gross oil and gas payments for a working interest
  • Taxable fringe benefits for nonemployees

You must also file Form 1099-NEC for each person from whom you have withheld any federal income tax (report in box 4) under the backup withholding rules regardless of the amount of the payment.

Form 1099-NEC filing date? 

Form 1099-NEC should be filed with the IRS on paper or electronically by January 31st of each year (February 1st in 2021).  A copy of Form 1099-NEC should also be sent to your vendors and independent contractors by January 31st of each year (February 1st in 2021)  There is no automatic extension available for the 1099-NEC form. The PATH Act, P.L. 114-113, Div. Q, sec. 201, accelerated the due date for filing Form 1099 that includes nonemployee compensation (NEC) from February 28 to January 31 and eliminated the automatic 30-day extension for forms that include NEC. Beginning with tax year 2020, use Form 1099-NEC to report nonemployee compensation.

NEW CAYMAN ISLAND INVESTMENT FUND LEGISLATION – IMMEDIATE EFFECTS

Changes to Cayman Investment Funds  Classified as Private Funds and Mutual Funds 

Overview:

The Cayman Islands Government Ministry of Financial Services and Home Affairs, together with other associated authorities (in particular, the Cayman Islands Monetary Authority “CIMA”) has notified the financial services industry of several pending changes to the regulation of investment funds. On January 8, 2020, the government published a draft Private Funds Bill, 2020 (the “Private Funds Bill”) and a draft Mutual Funds (Amendment) Bill, 2020 (“Mutual Funds Bill,”), both of which seek to enhance the oversight of closed-ended and open-ended funds (“Investment Funds”). These new bills were presented to the Legislative Assembly on January 30, 2020, where they were passed into law with only minor changes. The amendments came into force on February 7, 2020 (the “Commencement Date’)

Purpose:

The Private Funds Bill seeks to establish a framework for monitoring closed-ended funds, which are currently beyond the scope of the existing Mutual Funds Law (MFL). The Mutual Funds Bill, an amendment to the existing MFL, will enhance the regulatory and supervisory framework for mutual funds. Perceived Purposes: (1) Strengthen investor confidence in Cayman Islands investment funds vehicles, and (2) Ensure that the Cayman Islands remains the preeminent jurisdiction for investment funds formation.

The bills account for the need to update the investment funds framework while staying mindful of industry realities. The bills also address EU suggestions for investment fund oversight as set forth in a report dated May 27, 2019 from the EU Code of Conduct Group (Business Taxation).

Details:

Private Funds Bill: The Private Funds Bill has three key pillars: (a) registration; (b) operational regulation; and (c) supervision and enforcement.

Registration – All existing vehicles falling within the scope of the private funds definition and section 3(1) of the Private Funds Bill must register with CIMA by August 7, 2020 and, once so registered, will be subject to regulatory obligations.  The Private Funds Bill sets out exemptions to the registration requirement for the following entities: regulated mutual funds and regulated EU-connected funds, non-fund arrangements, and certain overseas private funds that solicit the Cayman Islands public for investments.

Private Funds must provide information upon registration, pay an annual registration fee, comply with annual audit and return requirements, retain accessible records and comply with certain ongoing obligations in relation to valuation of fund assets, safekeeping of fund assets, cash monitoring and identification of securities. Private funds that are not yet registered with CIMA cannot, pending registration, carry on or attempt to carry on business in the Cayman Islands by receiving capital contributions from investors. However, they may still solicit eligible investors, including receipt of subscription documents, pending registration. That said, such private funds must make their registration application to CIMA within 21 days of accepting capital commitments from investors and must be registered with CIMA before receipt of capital contributions.

Operating Conditions for Registered Private Funds Once registered, the Private Funds Bill requires private funds to comply with certain ongoing obligations in order to meet best practices and the needs of sophisticated global institutional investors.

The Private Funds Bill also contains requirements for valuation, safekeeping, title verification, and cash monitoring and offers flexibility by permitting private funds to choose the service provider(s) who will provide any required valuation, safekeeping, title verification, and cash monitoring services, provided that any administrator, custodian, or other independent third party appointed is independent from the fund’s manager or operator, or, where any manager or operator or their affiliates is appointed, they identify, manage, monitor, and disclose any conflicts of interest.

Supervision and Enforcement – The Private Funds Bill authorizes CIMA to administer the law. CIMA’s duties include examining registration applications and determining application parameters and other informational requirements.

In cases where CIMA determines that a private fund is not in compliance with its obligations, it may enforce special measures, such as the performance of an audit or one-off or periodic reports as appropriate. CIMA also has the power to impose administrative fines, varying in level depending on the provision(s) breached.

In certain instances — for example, when a private fund is carrying on business in a fraudulent or detrimental manner that harms investors — CIMA may take additional special measures, including imposing operational restrictions, appointing an adviser or controller to direct fund management, or deregistering the fund.

CIMA has notified industry that it will apply a risk-based approach to the regulatory oversight of private funds.

Mutual Funds Bill: The Mutual Funds Bill brings within the scope of regulation certain mutual funds not currently covered by MFL. Funds that meet the 15 or fewer investor criteria exemption set out in section 4(4)(a) of the MFL will now be required to register with CIMA and, once so registered, will be subject to regulatory obligations.

The exemption to the registration requirement for certain overseas private funds that solicit the Cayman Islands public for investments under the MFL will remain in place.

Similar to private funds, all regulated mutual funds must provide CIMA with information upon registration, pay an annual registration fee, comply with annual return requirements, retain accessible records, and have annual audits issued or undertaken by a CIMA-approved local auditor and in accordance with International Financial Reporting Standards or the Generally Accepted Accounting Principles of the United States of America, Japan or Switzerland or any non-high-risk jurisdiction. There is no specification with respect to prior years’ unaudited reports, or if they will be required to be audited.

Implementation:

The Cayman Islands government has notified industry that it is mindful that a successful transition to the new regulations will require preparation and adequate time. New entities that are within the scope of these new requirements must adhere to the registration process prescribed with immediate effect. Existing entities will have a grace period of six months in which to comply with the registration requirements and should complete the registration requirements by August 7, 2020. Further, the Cayman Islands government has confirmed that the local audit requirement and electronic submission of the Fund Annual Return (FAR) will not be required to be filed with CIMA until six months following the first full fiscal year after registration (for most funds with a December 31 year end, this will mean their first filing will be due by June 30, 2022, in respect of the year ended December 31, 2021).

TAX FILING & PAYMENT DEADLINE POSTPONED

The Treasury Department and IRS announced on March 21, 2020 that the federal income tax filing due date has been extended by Presidential signature of the Families First Coronavirus Response Act (H.R. 6201).

The due date of April 15, 2020 has been postponed to July 15, 2020.

The IRS has now made official the March 20 announcement by the Treasury Secretary, that postpones until July 15, 2020, the filing date for 2019 federal income tax returns and 2020 federal income tax estimates that would otherwise be due on April 15, 2020.

Any person with a Federal income tax payment or a Federal income tax return due April 15, 2020 is an “Affected Taxpayer.” The term “person” includes an individual, a trust, estate, partnership, association, company or corporation, as provided in  Code Sec. 7701(a)(1).

For an Affected Taxpayer, the due date for filing Federal income tax returns and making Federal income tax payments due April 15, 2020, is automatically postponed to July 15, 2020. Affected Taxpayers do not have to file Forms 4868 or 7004 to obtain this relief.

The relief provided is available solely with respect to Federal income tax payments (including payments of tax on self-employment income) and Federal income tax returns due on April 15, 2020, in respect of an Affected Taxpayer’s 2019 tax year, and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for an Affected Taxpayer’s 2020 tax year.

No extension is provided in the Notice for the payment or deposit of any other type of Federal tax or for the filing of any Federal information return. As a result of the postponement of the due date for filing Federal income tax returns and making Federal income tax payments from April 15, 2020, to July 15, 2020, the period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file the Federal income tax returns or to pay the Federal income taxes postponed by this notice. Interest, penalties, and additions to tax with respect to such postponed Federal income tax filings and payments will begin to accrue on July 16, 2020.

No limit on amount of payment that can be postponed.  Notice 2020-17 put limits on the amount of tax payments that could be postponed from April 15 until July 15.

 

References.  For extension of tax-related deadlines for taxpayers affected by disasters, see FTC 2d/FIN ¶ S-8502; United States Tax Reporter ¶ 75,08A4.  Thomson Reuters