Further guidance has been released by both the Internal Revenue Service (IRS) and the Delaware Division of Revenue (DOR) relating to last week’s extension of federal income tax filing and payment deadlines. Click the embedded links to see our prior posts on the federal filing extension and the federal payment extension.
Federal Gift Tax Returns And Payment Not Automatically Extended
On March 24, the IRS posted Frequently Asked Questions relating to Notice 2020-18. Of particular note is that the extension does not automatically apply to federal estate tax or gift tax returns. Federal gift tax returns (Form 709) are normally due on April 15 just like individual income tax returns, and the gift tax filing deadline is automatically extended in lockstep with the income tax filing deadline when a taxpayer applies for the automatic extension using Form 4868. FAQ #7 makes it clear that Notice 2020-18 applies to income tax returns and does not extend to gift tax returns in the same way. Taxpayers who wish to extend the April 15, 2020 filing deadline for a 2019 gift tax return will have to file Form 4868 (or Form 8892) by the deadline, and even with the filing extension any gift tax owed will be subject to penalty and interest based on an April 15 payment due date.
Delaware Income Tax
The Delaware DOR issued Technical Information 2020-1 on March 23, 2020. In the Memorandum, the DOR largely takes the same position with regard to Delaware income tax returns that the IRS takes with regard to federal income tax returns in Notice 2020-18. Specifically:
- Delaware state personal and fiduciary income tax returns otherwise due on April 30, 2020, are now due on July 15, 2020, without the need for the taxpayer to file an extension. A taxpayer may file Form 1027 (individual) or Form 400-EX (fiduciary) for an additional automatic extension to October 15, 2020. The DOR provided guidance for electronic submission of extension forms.
- Payment of 2019 personal and fiduciary income tax liability is now due by July 15, 2020. Tax underpayments, and corresponding calculation of penalty and interest, will be determined based on a July 15 due date.
- The due date for payment of the first installment of 2020 estimated Delaware state personal and fiduciary income taxes has been extended from April 30, 2020, to July 15, 2020. But, as with the federal extension, second quarter 2020 estimated payments are still due June 15, 2020.
- Delaware state corporate tentative tax returns otherwise due on April 15, 2020, are now due on July 15, 2020. No other state corporate return deadlines are affected.
In these trying times, we are fully committed to protecting our clients' interests and well-being. Should you have any questions or concerns, please do not hesitate to reach out to the Tax, Estates & Business Practice Group of Morris James LLP.