United States

IRS provides additional relief for S corporations and partnerships

Guidance postpones filing, payment date for additional forms/elections

TAX ALERT  | 

Notice 2020-23 amplifies previous filing and payment relief, and now provides that any payment or filing obligation associated with Form 1120S (S corporation) or Form 1065 (partnership) that otherwise would be due on or after April 1, 2020 and before July 15, 2020, will be automatically postponed until July 15, 2020. This relief applies both to returns with an original due date falling between April 1 and July 15, as well as returns with an extended due date falling within that time period. 

In addition to the Form 1120S and Form 1065, the relief also postpones until July 15:

  1. The payment and filing date for Form 8752, the required annual deposit for fiscal year pass-through entities that have elected a tax year other than their required tax year,
  2. The period within which a person can file a refund claim, where that period would otherwise close during the April 1 – July 15 period, 
  3. The due date for the second quarter federal estimate, normally due June 15. That payment will now be due on the same date that any remaining 2019 federal balance due and the 2020 first quarter payment is due.

This notice provides similar relief for elections that are required to be made with a timely filed Form 1120S or Form 1065, as well as schedules, returns and other forms that either would be filed as attachments to the return or that must be filed by the due date of the Form 1120S or Form 1065. For example, a section 754 election (election to adjust the basis of partnership property) filed with a Form 1065 will be timely filed if it is included with a partnership return filed in accordance with these rules.

Finally, the notice specifies that any time-sensitive action listed in Rev. Proc. 2018-58 that is due on or after April 1, 2020 and before July 15, 2020, is similarly postponed until July 15. This would include items such as:

  • An election under section 1362(a) by a small business corporation to be an S corporation
  • The time period for filing a qualified subchapter S trust (QSST) election or an electing small business trust (ESBT) election for a trust acquiring S corporation shares
  • The time period for requesting relief associated with making late S corporation elections 
  • The notification deadline for a partner acquiring an interest in a partnership with a section 754 election
  • An election by a newly formed organization to be excluded from the partnership rules under subchapter K

This guidance is welcome relief for partnership and S corporations that had lingering questions about whether the filing and payment relief provided in prior guidance would be extended to include many of the items noted above.

 

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