Guidance for NFPs on April 15 Extended Payments
The IRS released Notice 2020-17, which provides further guidance on the extended payment date for tax payments due on April 15, 2020. Any unrelated business income taxes originally due April 15, 2020, such as the 1st quarter 990-T estimates for 2020 for calendar-year nonprofit organizations, can be paid as late as July 15, 2020, with no interest or penalties. The Notice makes clear that return filing deadlines are not extended.
For nonprofits formed as corporations, the maximum amount that can be deferred is $10,000,000. For nonprofits formed as trusts, the maximum amount that can be deferred is $1,000,000. Amounts in excess of these maximum deferred amounts will need to be paid by April 15, 2020, or incur penalty and interest charges for late payment of taxes.
More Guidance and Relief Requested
This Notice only addresses unrelated business income taxes due April 15, 2020. Future guidance may address unrelated business income and excise tax payments due at other times, including payments for fiscal year nonprofit organizations and private foundations.
The AICPA has called for the Treasury Department and the IRS to provide relief to all taxpayers in light of the uncertainty and challenges caused by the spread of the Coronavirus (“COVID-19”) pandemic. Specifically relevant to nonprofit organizations, the AICPA made the following recommendations:
- Extend certain deadlines falling on or after March 15, 2020, and before October 15, 2020, to give organizations additional time to file and make payments through October 15, 2020.
- Provide an automatic extension without the need to file any forms or request an extension.
- Waive late payment penalties and interest through October 15, 2020.
- Provide appropriate relief regarding elections as well as other types of filings such as payroll tax returns.
While pressure is placed on Congress and Treasury to extend the tax return filing date for all taxpayers, your tax team at Cherry Bekaert continues working to provide our clients with timely filing of completed returns and thoughtful preparation of extensions, when needed. We are ready to work with you on a plan for payments under the Notice to maximize your cash flow during this extraordinary time.