Late on Friday, the IRS formalized U.S. Treasury Secretary Steven Mnuchin’s announcement earlier in the day regarding the extension of the tax filing deadline to July 15 (see our March 20 alert here) by issuing Notice 2020-18, which contains several important clarifications. It also supersedes Notice 2020-17, issued by the IRS earlier in the week and discussed in our March 18 alert (see here).

Automatic extension to July 15. This new Notice provides that, for all persons (including individuals, trusts, estates, partnerships, associations, companies, and corporations) with a federal income tax payment or return due on April 15, the due date for filing federal income tax returns and making federal income tax payments is automatically postponed to July 15, without the need to apply for an extension of time to file.

No limit on postponed payment amount. Significantly, unlike Notice 2020-17 (which set caps of $10,000,000 for corporations and $1,000,000 for others), this new Notice clarifies that there is no limitation on the amount of the payment that may be postponed. The relief in the new Notice applies to both (i) federal income tax payments (including self-employment income tax payments) and returns due for the 2019 taxable year, and (ii) federal estimated income tax payments for the 2020 taxable year.

Other federal tax returns likely still due on April 15. The Notice explicitly states that no extension is provided for the payment or deposit of any other type of federal tax, or for the filing of any federal information return. This suggests that the IRS’s view is that gift tax returns, for instance, are still due on April 15, unless an extension of time to file is filed with the IRS on or before that date.

So what effect would a tax return filing extension have in light of the relief provided by Notice 2020-18? Hopefully future IRS guidance will answer this question. For example, if an individual wishes to extend the time to file his or her 2019 income tax return, should that person file a Form 4868 by April 15? What if that form instead is filed on July 15? Would the extension last through October 15, as it normally would, or would the extension be for a full 6 months and thus run through January 15, 2021?

In the face of this uncertainty, if a taxpayer expects to file a federal income tax return after July 15, the safest course of action would be to file an extension request by April 15, assuring an extension at least to October 15.