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Louisiana Quarterly Estimated Income Tax Payments Remain Due on April 15, 2020

In response to the COVID-19 pandemic, the Treasury Department, the Internal Revenue Service ("IRS") and the Louisiana Department of Revenue ("LADOR") have announced the following tax-related relief measures related to COVID-19.  Louisiana taxpayers who file quarterly estimated returns should note that unlike the federal government, the LADOR has not extended the April 15, 2020 deadline for first quarter estimated income tax payments.

IRS Notice 2020-18

The Treasury Department and the IRS issued Notice 2020-18 to provide relief from tax deadlines to affected taxpayers.  For individual taxpayers, Notice 2020-18 automatically extended the April 15, 2020 due date for filing Federal Income Tax Returns for taxpayers' 2019 taxable year and making federal income tax payments until July 15, 2020.  Further, the April 15, 2020 due date for Federal estimated income tax payments (including payments of tax on self-employment income) for the taxpayers' 2020 taxable year is also automatically extended to July 15, 2020.  The relief is automatic; taxpayers do not need to file any additional forms to qualify.  There is no limitation on the amount of the payment that may be postponed.  No penalties or interest will be assessed for failure to file the federal income tax returns or pay the federal income taxes for the period postponed by this notice. Individual taxpayers who need additional time to file beyond the July 15 deadline can request a filing extension by filing IRS Form 4868. 

Louisiana – Revenue Information Bulletin No. 20-009 and Revenue Ruling 20-002

For Louisiana resident and non-resident taxpayers, the LADOR has extended the May 15, 2020, deadline for filing and submitting any income tax due with the returns to July 15, 2020.  Revenue Information Bulletin No. 20-009.  This is an automatic extension and no extension request is necessary.  No penalties or interest will be assessed provided that the return and payment are submitted to the LADOR by July 15, 2020.

It is important to recognize, however, that estimated tax payments are not included in this relief.  In Revenue Ruling 20-002, the LADOR clarified that first and second quarterly payments remain due on April 15 and June 15, respectively.  If a taxpayer is required to remit estimated tax payments, but fails to do so, the Underpayment of Estimated Tax ("UET") penalty is added to the tax due.  Louisiana law provides no mechanism for the LADOR to extend the due date of estimated income tax payments by individuals.  However, in consideration of the extraordinary circumstances caused by the coronavirus pandemic, the LADOR announced safe harbor procedures for taxpayers to avoid the imposition of UET. Revenue Ruling 20-002.  The LADOR will automatically waive any UET penalty otherwise due for April 15 and June 15, 2020 estimated payments provided the following criteria are met:

  1. The taxpayer pays the April 15 and June 15, 2020, estimated payments timely.
  2. The amount paid on the April 15, 2020, estimated payment is at least 90% of the amount paid on the April 15, 2019 estimated payment.
  3. The amount paid on the June 15, 2020, estimated payment is at least 90% of the amount paid on the June 17, 2019 estimated payment.

Revenue Ruling 20-002 confirms that the same UET penalty waiver is available for fiscal year taxpayers.  Fiscal year taxpayers must follow the same criteria stated above but substitute the first and second estimated income tax payment due dates as appropriate based upon the taxpayers' taxable year.

TAKEAWAYS

Individuals should consult their own tax and accounting advisors to determine whether these relief provisions will impact their particular income tax planning and reporting strategies. For example, high income individual taxpayers may disproportionately benefit from the deferral opportunities because they are the taxpayers most likely to pay 2020 estimated income tax payments on April 15th. Stone Pigman attorneys are also ready and available to guide clients through the rapidly changing IRS and LADOR responses to COVID-19.

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