IRS Clarifies Filing Date Relief and Expanded Tax Payment Deferral 

| 3/25/2020
IRS Q&As Clarify Filing Relief and Expanded Payment Deferral

The IRS superseded Notice 2020-18. Read about the expanded relief provided in Notice 2020-23.

The IRS has provided questions and answers to help clarify filing and payment deferral rules.

On March 20, the IRS issued Notice 2020-18, expanding on relief provided earlier for taxpayers affected by the COVID-19 national emergency declared by the president. Specifically, Notice 2020-18 automatically extends the April 15, 2020, income tax filing due date until July 15, 2020. The notice also allows interest- and penalty-free deferral of income tax payments due on April 15, 2020, until July 15, 2020. On March 24, 2020, the IRS added clarifying questions and answers (Q&As) on its website.

Filing date extension

The filing due date extension in Notice 2020-18 applies automatically; taxpayers do not have to file an extension request to get relief. Additionally, taxpayers eligible for relief under Notice 2020-18 that cannot file their returns by July 15, 2020, can request an additional extension by filing Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Income Tax Return,” or Form 7004, “Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns,” whichever is applicable, on or before July 15, 2020. The Q&As make clear that the due dates for contributions to individual retirement accounts, Archer medical savings accounts, and health savings accounts also have been extended to July 15, 2020.

The filing due date extension in Notice 2020-18 applies only to income tax returns, including Form 8960, “Net Investment Income Tax – Individuals, Estates, and Trusts,” and Form 8991, “Tax on Base Erosion Payments of Taxpayers With Substantial Gross Receipts.” It does not apply to information returns or nonincome tax returns such as Forms 706, “United States Estate (and Generation-Skipping Transfer) Tax Return,” and 709, “United States Gift (and Generation-Skipping Transfer) Tax Return.” Though not specifically addressed in the notice or Q&As, it also is likely that the due date is postponed for information returns that are not separately filed but that are required to be filed with federal income tax returns (such as Form 5471, “Information Return of U.S. Persons With Respect to Certain Foreign Corporations”). Q&A 4 provides filing relief for fiscal-year taxpayers with a 2019 year end. However, no relief currently is provided for tax returns due May 15, 2020, or June 15, 2020.

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Tax payment deferral

Interest-free tax payment deferral applies to income tax payments (including payments of tax on self-employment) due on April 15, 2020, for the 2019 tax year and first quarter estimated tax payments for tax year 2020 due on April 15, 2020. The Q&As make clear that payment deferral relief does not apply to estimated tax payments due on June 15, 2020. Unlike the relief originally provided, the amount of tax that can be deferred is not limited. According to Q&A 4, fiscal-year filers with a 2019 year end also are eligible for payment deferral.

Tax payment deferral under Notice 2020-18 does not apply to nonincome taxes such as payroll tax deposits. However, the Q&As clarify that payment deferral does apply to payment of the 2020 installment of the tax imposed under Section 965(h).

Taxpayers that are eligible for relief but that do not pay tax due on or before July 16, 2020, are subject to interest and penalties beginning on July 16, 2020.

Looking ahead

Taxpayers that do not have relief under Notice 2020-18 should not lose hope. The IRS might issue subsequent guidance providing additional relief. Also, legislation currently working its way through Congress provides additional tax relief. Taxpayers also should check with their advisers to determine whether relief is available for state tax filing and payment obligations.

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Rochelle Hodes
Rochelle Hodes
Principal, Washington National Tax
Howard Wagner - social
Howard Wagner
Partner, Washington National Tax