While the Louisiana Department of Revenue (the “Department”) has extended some filing and payment deadlines, it has not extended the April 15 and June 15 deadline for making 2020 first and second quarter individual and corporate estimated state income tax payments. Nor has the Department extended the April deadline for reporting and remitting March state sales and use taxes.
Estimated Income Tax Payments for the 2020 Tax Year
Although the deadlines for filing 2019 income tax returns and paying 2019 income tax liabilities have been extended to July 15, 2020, the deadlines for making Louisiana state declaration (estimated income tax) payments for the 2020 tax year, for both individuals and corporations, have not been extended. The Department has issued guidance (Rev. Rul. 20-002 (March 30, 2020)) stating that it will automatically grant a waiver of the underpayment of estimated tax (“UET”) penalty for first and second quarter estimated payments, under certain circumstances. La. R.S. 47:118(I) provides that the Secretary may waive underpayment penalties when an individual’s failure to file was in good faith. The Secretary may presume an individual acted in good faith if the failure to make the estimated payment was attributable to extraordinary circumstances beyond the individual’s control. Revenue Ruling 20-002 provides that the public health emergency resulting from the COVID-19 pandemic and the general stay-at-home order creates extraordinary circumstances, including that taxpayers do not have their 2019 liability from which to base their 2020 estimated payments. As a result, the Department will automatically waive UET penalties otherwise due for the April 15 and June 15, 2020 estimated payments if:
- The estimated payment is made timely.
- The April 15, 2020 payment is at least 90% of the amount paid on the April 15, 2019 estimated payment.
- The June 15, 2020 payment is at least 90% of the amount paid on the June 15, 2019 estimated payment.
A taxpayer has until May 17, 2022, one year after the statutory due date of the 2020 return, to request the waiver.
For fiscal year filers, the UET penalty waiver will also be granted if the taxpayer’s timely-filed first and second quarter estimated payments satisfy the above criteria.
For corporate income taxes, the Department’s current guidance related to the coronavirus pandemic does not include estimated tax payment relief or an automatic penalty waiver. But La. Rev. Stat. §287.655(D) provides safe harbors against the penalty for underpayment of estimated tax. Nevertheless, since the determination of whether the penalty is due is based on various alternative mathematical computations, it is unclear how such relief would not be in some sense, “automatic.” See RIB 20-009 (March 23, 2020) for relief available with respect to income and franchise tax returns.
Late Filed Elections for Pass-Through Entity Tax
Rev. Rule 20-002 also states that the Department will consider an election by a flow-through entity to pay tax on its income as timely if the election is filed on or after April 16, 2020 but before July 16, 2020 (for a calendar year filer). For a fiscal year filer with an election due between March 1 and May 30, 2020, the election will be considered timely if it is filed on or after the fifteenth day of the fourth month after the close of the taxable year but before the fifteenth day of the seventh month after the close of the taxable year.
Extension of Time or Transfer Credits (2019 Tax Period Only)
Rev. Rule 20-002 also extends the deadline for transferring a transferable credit or for the execution of a binding agreement to transfer such credit by thirty (30) days for income and franchise tax returns with an original due date between March 1 and May 30, 2020. For a 2019 calendar year filer of returns for individual income tax, corporation income, composite partnership income tax and fiduciary income tax, the extended deadline is June 15, 2020. For a fiscal year filer with an income or franchise tax return filing and payment due date between March 1 and May 30, 2020, the extended deadline is thirty days from the original due date of the return.
State Sales/Use Tax Returns Due in April of 2020
In Revenue Information Bulletin 20-008, the Department extended the deadline to report and remit February 2020 state sales and use taxes by sixty (60) days. The returns and payments are now due May 20, 2020 but the Department has not extended the April filing deadline for March 2020 taxes. Unless guidance extending this deadline is issued within the next week, the deadline for March 2020 taxes remains April 20, 2020.
For additional information, please contact the Kean Miller Tax Group: Jaye Calhoun at (504) 293-5936; Carey Messina at (225) 382-3408; Kevin Curry at (225) 382-3484; Jason Brown at (225) 389-3733; Angie Adolph at (225) 382-3437; J. Mark Miller at (318) 562-2701; Phyllis Sims at (225) 389-3717; Robert Schmidt at (225) 382-4621; Royce Lanning (832) 494-1711; or Willie Kolarik at (225) 382-3441.