Federal Tax Filing and Payment Due Dates Will Not Change

Tax, Business, and Estate Planning Update

Federal Tax Filing and Payment Due Dates Will Not Change

The deadline for tax filings and tax payments will not be postponed. The due date remains July 15, 2020. (IRS News Release 2020-134, June 29, 2020.)

If an individual is unable to file his or her tax return (i.e. the IRS Form 1040 series) by July 15, 2020, he or she can extend the due date for filing the tax return until October 15, 2020. There are two ways to get this extension:

First. The individual can file IRS Form 4868. IRS Form 4868 must be filed on or before July 15, 2020. The taxpayer must also estimate his or her tax liability and pay the amount due.

Second. The individual can determine the amount of tax he or she expects to owe and then pay that amount through Direct Pay, through the Electronic Federal Tax Payment System or with a credit or debit card. The taxpayer will need to indicate that the payment is for an extension to file. When using one of these payment methods, the taxpayer does not have to file IRS Form 4868. Instead, he or she will receive a confirmation number for their records.

The due date for paying tax is July 15, 2020. Extending the due date to file the tax return until October 15, 2020, does not extend the due date for paying the tax due. (A taxpayer can request, by July 15, 2020, a six month extension of time to pay tax, but the extension is not automatic and requires an undue hardship. See here for more information.) Interest is charged when the tax is not timely paid. The interest rate is variable. For the third quarter of 2020, the interest rate is 3%.

If a taxpayer is unable to pay the tax in full, the taxpayer has several options. These include:

(a)  A taxpayer might get a loan from a bank or other lender to pay the amount due, especially if the overall cost of the loan is less than the expected total tax, interest, and penalties due the IRS.

(b)  If an individual owes less than $50,000, the individual can setup an online payment agreement.

(c)  A taxpayer can enter into an installment agreement. A payment plan can be arranged by phone or by filing IRS Form 9465. When an installment agreement is in place, the failure to pay penalty is cut in half. The usual penalty rate of 0.5% per month is reduced to 0.25% per month.

(d)  A taxpayer can request an offer in compromise. The taxpayer must meet certain qualifications. To determine eligibility, the IRS has a tool. See more information about the offer in compromise.