On March 20, 2020, the U.S. Treasury Department and the Internal Revenue Service (IRS) issued Notice 2020-18 as part of the government's response to COVID-19, postponing the April 15 U.S. federal income tax return filing and payment deadlines, and giving individuals and many businesses until July 15 to file such returns and pay such taxes.
The relief applies to income tax returns for the 2019 taxation year and related income tax payments on filing that would ordinarily have been due April 15, 2020. It also applies to quarterly estimated income tax payments for the 2020 taxation year that would ordinarily have been due on April 15, 2020. The filing and payment extensions to July 15, 2020 are automatic, and do not require any extension request forms to be filed with the IRS.
Notice 2020-18 expanded upon and superseded the relief provided in Notice 2020-17 issued on March 18, 2020, which only deferred the tax payment deadline (not the filing deadline), and limited the amount of tax liability eligible for deferral.
This extension to file returns and pay taxes will be helpful to U.S. subsidiaries of Canadian parent corporations, as now these subsidiaries receive automatic extension to July 15 to pay any outstanding taxes and to file returns or extensions. The extension to file returns and pay taxes will be welcome news to U.S. citizens and green card holders who live in Canada, because even though their U.S. income tax returns are required to be filed by June 15 of the following year, their tax payments are normally due April 15. Furthermore, Canadians who file U.S. nonresident income tax returns to report wages subject to U.S. income tax withholding are normally required to file tax returns and pay tax by April 15, so they will also benefit from this extension.
From a U.S. state tax perspective, some (but not all) states set their filing and payment deadlines with reference to U.S. federal deadlines. Therefore, each state will need to be reviewed in order to determine if this federal relief applies at the state level, and whether an extension request must be filed with the state tax authorities to request additional time to file.
Taxpayers who are expecting refunds should file their U.S. income tax returns as soon as they can do so.
If you have any questions about these tax changes, please contact one of our trusted BDO Tax advisors.
The information in this publication is current as of March 23, 2020.
This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.