United States

State conformity to federal COVID-19 extensions

TAX ALERT  | 

On March 20, 2020, the IRS released Notice 2020-18, automatically extending federal income tax payments and returns due on April 15, 2020 to July 15, 2020 in response to the COVID-19 pandemic.

Beginning in mid-March, before the federal filing and payment extension was issued in Notice 2020-18, a number of states began extending filing and payment dates. Some of those states conformed with the initial federal payment extension provided in an earlier notice, while others provided extensions on request, or other filing and payment relief. For more information on the initial state guidance, please read our article, State taxing authorities address COVID-19 filing and business changes.

Automatic federal extension and state filings due to Notice 2020-18

For state and local income tax purposes, both business and individual income taxpayers will need to consider how the automatic federal extension to July 15, 2020 will affect state filings and payments. Currently, about 75% of states conform to the individual and corporate federal filing date of April 15. Some states automatically conform, while others have statutorily provided the same filing date as the federal, but without automatically conforming. The remaining states have filing dates after April 15. 

For example, and not including any recent changes due to COVID-19, Alabama and Rhode Island statutorily require returns to be filed on the same date as the corresponding federal income tax returns. Maryland, however, statutorily requires the return to be due on April 15. State and local business and individual tax conformity to Notice 2020-18 may not be immediately clear and taxpayers should use due diligence when determining state filing and payment deadlines as some states may need to provide explicit guidance reflecting an extension. Taxpayers should also consider that state and local filing and payment relief may be limited. For example, some states have not changed due dates for estimated payments.

Takeaways

Taxpayers should anticipate frequent federal, state and local tax developments as the response to the COVID-19 pandemic unfolds. Thus far, a number of states have provided both business and sales and use tax filing guidance. 

State and local tax authorities may provide relief in a number of forms including automatic extensions, interest and penalty waivers, payment extensions without a corresponding filing extension, or other relief upon request. 

RSM is working closely with the AICPA to monitor state and local responses for all tax types. A more detailed chart is available on the AICPA’s website. For more information on the coronavirus, please see RSM’s Coronavirus Resource Center which includes related and frequently updated developments and a link to sign up for RSM’s weekly Coronavirus webcast series.  

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