On March 17, 2021, the Treasury Department and the IRS announced that the federal income tax filing due date for individuals for the 2020 tax year will be automatically extended from April 15, 2021 to May 17, 2021. Individual taxpayers, including those who pay self-employment tax, can also postpone 2020 federal income tax payments due on April 15, 2021 to May 17, 2021, without penalties and interest, regardless of the amount owed. Individuals who need additional time to file their returns beyond the May 17 deadline can request a filing extension until October 15, 2021, but taxpayers will need to pay any federal income tax due by May 17, 2021 to avoid interest and penalties. Significantly, the relief as announced is limited to individual taxpayers, in contrast to last year when the relief provided by the IRS ended up being more comprehensive in scope.
The news release issued by the IRS on March 17 only announced the postponement of the filing and payment deadline for individual taxpayers and made no reference to the obligations of other taxpayers. For example, the 2020 tax returns for calendar year C corporations and trusts are also due by April 15, 2021. In addition, the IRS stated that the relief was only for the 2020 tax year, and therefore will not apply to estimated tax payments due on April 15, 2021. The IRS will be issuing formal guidance in the coming days, which hopefully will confirm whether the relief for this year’s tax filing season will indeed be limited to individual taxpayers and the 2020 tax year.
Finally, the IRS announcement only applies to federal income tax returns, as the deadlines for state tax returns are set by each jurisdiction. Some states will automatically conform to the new federal deadline, but others will need to decide what action to take. Maryland, for example, recently extended its state filing deadline to July 15, 2021. Last year most states adopted the IRS’s postponement of filing and payment deadlines, but it remains to be seen whether all states will follow the federal extension this year.
We will continue to monitor any changes to this year’s tax filing season that will impact our clients and will be watching for the formal guidance from the IRS that is expected soon. If you have any questions regarding the IRS announcement, please contact your Bennett Thrasher tax advisor by calling 770.396.2200.