Further, the Notice provides that the Postponed Payment Amount is up to $10,000,000 for each consolidated group (as defined in Treas. Regs. §1.1502-1) or for each C corporation that does not join in filing a consolidated return. For all other Affected Taxpayers, the Postponed Payment Amount is up to $1,000,000 regardless of filing status. For instance, the Postponed Payment Amount is the same for a single individual and for married individuals filing a joint return.
Moreover, the Notice clarifies that relief is available solely with respect to federal income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for an Affected Taxpayer’s 2019 taxable year, and Federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for an Affected Taxpayer’s 2020 taxable year.
The Notice provides no extension for the payment or deposit of any other type of federal tax, or for the filing of any tax return or information return. As a result of the postponement of the due date for making federal income tax payments up to the Postponed Payment Amount, the period beginning on April 15, 2020 and ending on July 15, 2020 will be disregarded in the calculation of any interest, penalties, or additions to tax for failure to pay the federal income taxes postponed by the Notice. Any applicable interest, penalties, and additions to tax with respect to such postponed federal income tax payments will begin to accrue on July 16, 2020. In addition, interest, penalties, and additions to tax will accrue, without any suspension or deferral, on the amount of any federal income tax payments in excess of the Postponed Payment Amount due but not paid by an Affected Taxpayer on April 15, 2020.
Affected Taxpayers subject to penalties or additions to tax despite the relief granted by the Notice may seek reasonable cause relief under IRC § 6651 for a failure to pay tax or seek a waiver to a penalty under IRC § 6654 for a failure by an individual or certain trusts and estates to pay estimated income tax, as applicable. Similar relief with respect to estimated tax payments is not available for corporate taxpayers or tax-exempt organizations under IRC § 6655.
LOUISIANA TAX LAW UPDATE
Louisiana Sales Tax Return Extensions and Other Matters Related to COVID-19
On March 19, 2020, the Louisiana Department of Revenue (the “Department”) released Revenue Information Bulletin No. 20-008 (“RIB”). The purpose of the RIB is to provide filing and payment extension relief for certain taxes due on March 20, 2020, and to share additional important information with Louisiana taxpayers.
February 2020 Sales Tax Return
Generally, the February 2020 sales tax returns and payments would become due on March 20, 2020. However, the RIB provides that the filing and payment deadline for the February 2020 sales tax period is extended to May 20, 2020. Please note that this is an automatic extension and no extension request is necessary.
The Department will waive delinquency penalties and compromise interest associated with delinquent sales tax remittances provided that the returns and payments are received by the extended due date of May 20, 2020.
Moreover, the RIB provides that Taxpayers cannot utilize the Parish E-File or Sales Tax Online filing systems to take advantage of this filing and payment extension relief. Specifically, sales tax returns and payments must be submitted via LaTAP or by paper filing. Further, all electronic filing and payment mandates contained within Title 61 of the Louisiana Administrative Code relative to sales tax are temporarily suspended. No penalties will be assessed for a taxpayer’s failure to file a sales tax return electronically or remit sales tax by electronic funds transfer.
Please note that for purposes of the RIB, February 2020 sales tax means and includes the following taxes: General Sales and Use Tax, Direct Marketer Sales Tax, Automobile Rental Excise Tax, Hotel Occupancy Tax, Ernest N. Morial New Orleans Exhibition Hall Authority Food and Beverage Tax, and Ernest N. Morial New Orleans Exhibition Hall Authority Tour and Service Contractor Taxes.
Assessments, Audits, and Litigation
As provided by Section 5 of Proclamation No. JBE 2020-30, the prescription of all tax assessments issued by the Department pursuant to Part III entitled “Assessment and Collection Procedures” of Chapter 18 of Title 47 of the Louisiana Revised Statutes is suspended effective March 16, 2020. The suspension of prescription of all Department tax assessments will remain in effect until April 13, 2020. This suspension of prescription is applicable to the time delay for a taxpayer’s petition to appeal for redetermination of an assessment with the Louisiana Board of Tax Appeals and for the time delays for appeals in Louisiana courts filed by taxpayers and the Department.
Further, the Department will grant an automatic extension on any outstanding audit or litigation matter, including but not limited to, proposed assessments, protests, requests for information, discovery requests, and continuances. In addition, please note that except for system-generated assessments on self-assessed returns, the Department will take no action in issuing formal assessments on audited accounts until at least April 13, 2020.
Please note that for purposes of the RIB, audited accounts are those accounts in which a field or correspondence audit was conducted by one of the Field Audit Tax Divisions (Income, Sales, or Excise) and preliminary findings were issued. This does not include routine account adjustments issued by the Taxpayer Compliance Divisions or the Criminal Investigations Division.
In addition, the RIB provides that the Department is temporarily suspending collection activity by distraint and sale on delinquent taxpayer accounts. However, please note that delinquency interest and penalties will continue to accrue in accordance with statute on unpaid balances.
This notice does not pertain to sales and use taxes that are assessed by the cities or Parishes. Therefore, filing and payment may still be required for some sales and use taxes.
If you would like to receive BHBM Email Tax Alerts to stay informed on the latest changes in tax law, subscribe here.
The information contained within this newsletter does not constitute legal advice and is not intended to create an attorney-client relationship. You should consult an attorney for individual advice regarding your own particular situation.