IRS and IL Tax Filing & Payment Relief - COVID-19 Alert

In Notice 2020-18, the Internal Revenue Service announced Federal income tax return filing and payment relief by moving the due date for filing certain returns and paying the related taxes from April 15 to July 15. The Service has released an FAQ that offers guidance as to which tax returns (and their related payments) are eligible for this relief, which may be accessed here.

The FAQ clarifies that the relief applies only to Federal returns with a filing or payment date of April 15, 2020, and specifically does not apply to Federal income tax returns and payments due on any other date. Thus, the relief applies primarily to the following that are customarily due on April 15:

Individual Income Tax Returns (Form 1040);
Individual First Quarter Estimated Tax Payments (Form 1040-ES);
Fiduciary Income Tax Returns for Trusts and Estates (Form 1041); and
Corporate Income Tax Returns for C Corporations (Form 1120)

The relief does not apply to S-corporations, partnerships, LLCs, and tax-exempt entities unless they have a fiscal year end and their filing date is April 15. The relief also does not apply to estate and gift tax returns and payments. Planning tip – if you anticipate filing a gift tax return for 2019, you should either file on or before April 15 or request an extension of time to file, even though an extension is not required for your individual income tax return.

2019 Income Tax Returns. The payment deferral applies regardless of when the tax return is filed. Taxpayers who have already filed their 2019 returns, but have not paid the balance due, may postpone payment until July 15. If a taxpayer is unable to file on or before July 15, an automatic extension of time to file should be requested by July 15. However, any balance due should be paid with the extension request. The relief does not change the estimated tax requirements or estimated tax penalty for 2019 returns. The relief also extends the due date for contributing to an IRA until July 15.

2020 Estimated Tax Payments. The relief applies only to 2020 estimated tax payments due April 15; the June 15 due date for the second estimated tax payment has not been changed. Accordingly, the second quarter payment due on June 15 is actually due prior to the first quarter payment that is now due on July 15. The due dates of third and fourth quarter estimated tax payments have not changed.

Illinois State Income Tax Returns and Payments. On March 25, 2020, Illinois issued Informational Bulletin FY 2020-24, declaring that the 2019 income tax filing and payment deadlines for all taxpayers (individuals, trusts and corporations) who file and pay their Illinois income taxes on April 15, 2020, are automatically extended until July 15, 2020. The relief is automatic, no filing is required to qualify. Penalties and interest will begin to accrue on unpaid balances beginning July 16, 2020. Unlike the IRS, the deadline for the first and second installments of estimated payments for 2020 taxes that are due April 15 and June 15 has not changed.

Other States' Income Tax Returns. Some states have followed the Federal lead and have pushed back certain filing deadlines. This, however, is changing daily, and we will send out in a future e-blast on the status of the states around the country.

We remain available to answer your questions on these and other matters. For further information, please contact:

Donna Hartl (312) 696-2035,
Barry Siegal (312) 696-1699,
Nancy Franks-Straus (312) 696-1368,
Jonathan Morton (312) 696-1018, or
Katherine Oswald (312) 696-1099