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Updated Guidance on Deferring Tax Payments and Mortgage Payments Due to the COVID-19 Outbreak

On Tuesday March 17, 2020, the Secretary of the Treasury, Steve Mnuchin, announced that there will be a 90 day interest and penalty free extension of time for certain taxpayers to pay all or part of their Federal income taxes beyond the normal April 15th deadline.

This was followed the next day by Internal Revenue Service Notice 2020-17, which provided some much needed clarity to this broad statement.

The Notice defines an Affected Taxpayer as “any person with a Federal income tax payment due April 15, 2020.” The relief provides that for taxpayers other than C Corporations (i.e. individuals), payments of up to $1,000,000 can be postponed until July 15, 2020 with no interest or penalty charge during that postponement period. In the case of each C Corporation or a consolidated group of corporations, the maximum amount that can be postponed is $ 10,000,000.

The notice makes it clear that this only applies to payments due on April 15, 2020, which includes any required first quarter 2020 estimated tax payment, and the above mentioned dollar limitations are aggregate amounts for each taxpayer. It is also clear that this only covers Federal income tax (including self-employment tax), and that this is not an extension of time to file any tax return or extension on a timely basis.

At this point, it is not clear whether any or all of the states will grant similar deferrals of payment or if any will allow blanket extensions of time to file.

Note that this does not provide any relief for the second quarter estimated tax payment due June 15th, nor to certain ex-pats or non-resident aliens that have a filing and payment due date of June 15th.

Additionally, banks in New York will waive mortgage payments for 90 days and suspend foreclosures, Gov. Andrew Cuomo said on Thursday, March 19, 2020.

Eligibility for waived payments is based on financial hardship, the Governor said. The 90 days constitutes a grace period. For those individuals who participate in this program, they will still owe their payments but be allowed to pay them at a later date.

The Janover Tax Practice Group will continue to monitor the situation and will provide updates as more information becomes available.

As always, please reach out to us with any questions or if you need any additional assistance during these most unusual times.

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