IRS Provides More Clarity on Extended Filing and Payment Deadlines
March 28, 2020
By Richard Shapiro
UPDATED: 3/28/2020, 10:30 AM
Recently, the IRS announced in Notice 2020-18 federal income tax return filing and payment relief in response to the coronavirus (COVID-19) emergency. Its release raised as many questions as it answered. On March 24, the IRS began the process of addressing those questions, through a series of Frequently Asked Questions, which it indicated will be updated periodically. Indeed, in Notice 2020-20, issued on March 27, 2020, the IRS reconsidered its initial position on the filing of gift (and generation-skipping transfer) tax returns and the making of payments of gift (and generation-skipping transfer) tax due April 15, 2020. This Alert has been updated to reflect that new position.
- Any person with a federal income tax return or payment due on April 15, 2020, is eligible for relief under the Notice, including the postponement of the filing and/or payment due date to July 15, 2020. “Person” is defined broadly -- an individual, a trust, an estate, a corporation, or any type of unincorporated business entity. The “payment due” is both 2019 federal income tax payments (including payments of tax on self-employment income) and 2020 estimated federal income tax payments (including payments of tax on self-employment income), regardless of the amount owed. The return in question must be due on April 15, 2020 – the relief does not apply to federal income tax returns and payments due on any other date.
- A taxpayer does not have to be sick, or quarantined, or have any other impact from COVID-19 to qualify for the relief. One only needs to have a federal income tax return or payment due on April 15, 2020.
- The Notice postpones the filing and payment of federal income taxes reported on the following forms: Form 1040, 1040-SR, 1040-NR, 1040-NR-EZ, 1040-PR, 1040-SS; Form 1041, 1041-N, 1041-QFT; Form 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-SF; Form 8960 (“Net Investment Income Tax”) and Form 8991 (“Tax on Base Erosion Payments of Taxpayers with Substantial Gross Receipts”).
If Form 990-T (“Exempt Organization Business Income Tax”) is due to be filed on April 15, it is postponed to July 15. For taxpayers whose Form 990-T is due on May 15, that due date is NOT postponed.
Returns due on March 16, 2020 (which includes Form 1065, Form 1065-B, Form 1066 and Form 1120-S for calendar year taxpayers) have NOT been postponed.
- If a tax return of an affected taxpayer for a fiscal year ending during 2019 is due on April 15, 2020, whether the original due date or the due date on extension, the due date is postponed to July 15, 2020.
- Taxpayers who have filing or payment due dates other than April 15 are not granted relief at this time.
- Payroll and excise taxes -- Normal filing, payment, and deposit due dates continue to apply.
- Estate taxes – Normal filing and payment due dates continue to apply.
- IRC Sec. 965(h) installment payments -- The relief applies to IRC Sec. 965 installment payments due April 15, 2020. For any taxpayer whose federal income tax filing due date has been postponed from April 15 to July 15, 2020, the due date of that taxpayer’s IRC Sec. 965 installment payment is also postponed to July 15, 2020.
- BEAT payments – For any taxpayer whose federal income tax filing deadline has been postponed from April 15 to July 15, 2020, the due date for Form 8991 and the BEAT (Basis Erosion and Anti-Avoidance Tax) payment is postponed to July 15, 2020.
- Information returns – The relief under the Notice does not apply to the filing of information returns.
Filing and Paying 2019 Federal Income Taxes and First Quarter 2020 Federal Estimated Income Taxes
- With respect to filing by July 15, there is no need to file any additional forms or call the IRS to call for the automatic federal tax filing and payment relief.
- Extensions – if the July 15 deadline cannot be met, an automatic extension must be requested by July 15, 2020. If the 2019 tax liability has been properly estimated and the extension is timely filed, the extended due date for the return is October 15, 2020.
- If an individual 2019 income tax return due April 15, 2020 was already filed with taxes owed but not paid, the taxes should be paid in full by July 15, 2020 to avoid interest and penalties. Interest and penalties will begin to be charged after July 15 for any amount remaining unpaid by that date.
- Scheduled payment of tax – If a 2019 income tax return due on April 15, 2020 was already filed and a payment of taxes was scheduled for April 15, 2020, that payment will not be automatically rescheduled to July 15, 2020. If the taxpayer does nothing, the payment will be made on the date the taxpayer chose.
- The federal relief does not apply to state liabilities. State filing and payment deadlines vary and are not necessarily the same as the federal filing and payment deadline.
- Second quarter 2020 estimated income tax payments – Second quarter 2020 estimated income tax payments are still due on June 15, 2020.
Filing and Paying Gift/Generation-Skipping Transfer Taxes
- The due date for filing Forms 709 (“United States Gift Tax (and Generation-Skipping Transfer) Tax Return”) and making payments of federal gift tax and generation-skipping transfer tax due April 15, 2020, is automatically postponed to July 15, 2020.
- The relief is automatic; there is no requirement to File Form 8892 (“Application for Automatic Extension of Time to File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax”) to obtain the benefit of the filing and payment postponement until July 15, 2020.
- A taxpayer may choose to file Form 8892 by July 15, 2020, to obtain an extension to file Form 709 by October 15, 2020. However, any federal gift and generation-skipping transfer tax payments remain due on July 15, 2020.
- The period beginning on April 15, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file a Form 709 or to pay federal gift and generation-skipping transfer tax shown on such form and postponed as noted. Interest, penalties and additions to tax with respect to such postponed Forms 709 and payments will begin to accrue on July 16, 2020.
Individual Retirement Accounts (IRAs) and Workplace-Based Retirement Plans
- The deadline for making IRA contributions is extended to July 15, 2019.
- If an individual owes the 10% additional tax on early withdrawals from an IRA or workplace-based retirement plan, the reporting and payment of the 10% additional tax is extended to July 15, 2020.
- For employers with a federal income tax return due date of April 15, 2020, the grace period for employers to make contributions to their qualified retirement plans on account of 2019 is July 15, 2020.
Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (MSAs)
- Contributions can be made to a HSA or Archer MSA for 2019 at any time up to July 15, 2020.
- Refund claims -- A claim for a refund for 2016, which must be filed by April 15, 2020, is not affected by the Notice.
- The time for filing Form 4466 (Corporation Application for Quick Refund of Overpayment of Estimated Tax) is not postponed.
- Delinquent 2019 estimated tax payments -- Relief under the Notice does not change the estimated tax requirements or estimated tax penalty for 2019. Relief from the penalty may be available as under normal rules.
We will keep you informed as the IRS provides additional guidance relating to coronavirus tax-related matters.