On March 24, the Treasury Department and the IRS released answers to frequently asked questions related to the relief provided in Notice 2020-18. Notice 2020-18 automatically postponed until July 15, 2020 the due date for filing certain federal income tax returns and the time to make payments of income tax that normally would be due April 15, 2020. The IRS plans to periodically update the questions and answers on this page to continue to communicate with taxpayers and tax professionals. Currently, there are answers to 24 questions. Here are some of the notable answers provided:
- The IRS clarified that any “person” with a Federal income tax return or payment due on April 15, 2020 is eligible for relief. The taxpayer does not actually have to be sick, quarantined or have any other impact from COVID-19 to qualify for relief. Moreover, there is no additional filing or request that needs to be made to be eligible for the relief. Under the Notice, “person” includes any type of taxpayer – individual, trust, estate, corporation or any type of unincorporated business entity (Forms 1040 series filers, Form 1041 series filers, Forms 1120 series filers, Form 8960 and Form 8991 are specifically listed). The relief does not apply to payroll taxes, excise taxes, estate taxes or gift taxes; the respective filing, payment and deposit due dates continue to apply to all of these taxes. Taxpayers who ordinarily would extend their gift tax return via extension of the Form 1040 would need to file a separate extension for the gift tax return.
- There is no relief provided for the filing of information returns, including international information returns. For this reason the international information returns that are filed with the corporate or individual tax return are covered by the relief, but the Forms 3520 and 3520-A that are filed separately from the tax return must still be filed by April 15, 2020, or the extended due date.
- Payments under this relief include Federal 2019 income tax payments (payment of tax on self-employment income is included) and 2020 Federal income tax estimated payments (also including payment of tax on self-employment income). There is no limit on the amount of the payments that can be postponed. However, the relief only applies to first quarter estimated tax payments due on April 15, 2020. Second quarter payments are still due on June 15, 2020. Additionally, the relief does not change the estimated tax requirements or estimated tax penalty for 2019.
- Any relief under Notice 2020-18 does not apply to Federal income tax returns and payments due on any other date besides April 15, 2020. Therefore, many fiscal year taxpayers may not be provided relief under this Notice, unless the fiscal year filer has a due date of April 15, 2020. In that case the filing deadline is postponed to July 15, 2020 even if the April 15 due date was an extended filing due date.
- The IRS highlighted two specific instances in which relief is provided. The first instance is for taxpayers with section 965(h) installment payments due April 15, 2020. For any taxpayer whose Federal income tax return filing due date has been postponed from April 15 to July 15, 2020, the due date of that taxpayer’s section 965 installment payment has also been postponed to July 15, 2020. The second instance is for estimated payments for a corporation required to make payments under section 59A. For any taxpayer whose Federal income tax return filing deadline has been postponed from April 15 to July 15, 2020, the due date for Form 8991 and the BEAT payment has been postponed to July 15, 2020
- Taxpayers with a return originally due on April 15, 2020 who need to request an automatic extension of time to file now have until July 15, 2020 to file Form 4868 or Form 7004. The extended due date, however, will remain unchanged. If you properly estimate your 2019 tax liability using the information available to you and file an extension form by July 15, 2020, your tax return will be due on Oct. 15, 2020.
- The time for filing Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax, is not postponed.
- Guidance on various due dates regarding IRAs, workplace-based retirement plans and health savings accounts (HSAs) is provided in Questions 17-21 of the FAQs. The due date for making 2019 contributions to IRAs and HSAs, or paying the additional 10% tax on distributions from IRAs or retirement plans in 2019, is now July 15, 2020. With regard to workplace-based retirement plans, employers with a federal income tax return due April 15, 2020 now have until July 15, 2020 to contribute to their qualified retirement plans; however, the due date for distributing employees’ excess elective deferrals from a plan is still April 15, 2020.
- If a taxpayer wishes to file a claim for refund for 2016, it must be filed by the original three-year deadline to make the claim. The Notice does not extend relief to any filings or payments for taxable year 2016.
As a reminder, the relief the Treasury and IRS are providing to taxpayers during the COVID-19 emergency only applies to Federal income tax payments and filings. RSM is monitoring the information posted by the state agencies and will provide updates about which states are following the federal government and implementing state tax filing and payment deadlines changes. RSM will continue to monitor and publish alerts regarding any further IRS guidance on federal tax filing and payment dates.