Tax Update: Tax Filing and Payment Deadline Extension

Filing and payment deadlines deferred. After briefly offering more limited relief, the IRS almost immediately pivoted to a policy that provides the following to all taxpayers—meaning all individuals, trusts, estates, partnerships, associations, companies or corporations regardless of whether or how much they are affected by COVID-19:

  1. For a taxpayer with a Federal income tax return or a Federal income tax payment due on April 15, 2020, the due date for filing and paying is automatically postponed to July 15, 2020, regardless of the size of the payment owed.
  2. The taxpayer doesn’t have to file Form 4686 (automatic extensions for individuals) or Form 7004 (certain other automatic extensions) to get the extension.
  3. The relief is for (A) Federal income tax payments (including tax payments on self-employment income) and Federal income tax returns due on April 15, 2020 for the person’s 2019 tax year, and (B) Federal estimated income tax payments (including tax payments on self-employment income) due on April 15, 2020 for the person’s 2020 tax year.
  4. No extension is provided for the payment or deposit of any other type of Federal tax (e.g. estate or gift taxes) or the filing of any Federal information return.
  5. As a result of the return filing and tax payment postponement from April 15, 2020, to July 15, 2020, that period is disregarded in the calculation of any interest, penalty, or addition to tax for failure to file the postponed income tax returns or pay the postponed income taxes. Interest, penalties and additions to tax will begin to accrue again on July 16, 2020.

IRS FAQs Answer Filing, Payment Postponement Questions

In a series of frequently asked questions (FAQs) on its website, IRS has provided answers with respect to its recently-announced guidance that postpones until July 15, 2020 the filing of returns and payment of taxes that were initially due on April 15, 2020.

Background. In Notice 2020-18, IRS announced special Federal income tax return filing and payment relief in response to the ongoing Coronavirus Disease 2019 (COVID-19) emergency.

IRS issues FAQs. Here are the key points in the FAQs:

Eligibility issues. The following FAQs address eligibility for relief:

No COVID-19 effect required. You do not have to be sick, or quarantined, or have any other impact from COVID-19 to qualify for relief. You only need to have a Federal income tax return or payment due on April 15, 2020. (FAQ 2)

Forms affected. 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— Individuals, Estates, and Trusts)
  • Form 8991 (Tax on Base Erosion Payments of Taxpayers With Substantial Gross Receipts)

With respect to Form 990-T, if that Form is due to be filed on April 15, then it has been postponed to July 15 under the Notice. For taxpayers whose Form 990-T is due on May 15, that due date has not been postponed under the Notice.

With respect to returns due on March 16, 2020, which include Form 1065, Form 1065-B, Form 1066, and Form 1120-S for calendar year taxpayers, the filing of those returns has not been postponed.

Relief for fiscal year filers. The relief provided in the Notice applies to Federal income tax returns and payments in respect of an Affected Taxpayer's 2019 tax year, and postpones those 2019 return filings and payments due on April 15, 2020 until July 15, 2020. If a taxpayer's Federal income tax return for the fiscal year ending during 2019 is due on April 15, 2020, whether that is the original due date or the due date on extension, the taxpayer's filing due date is postponed to July 15, 2020.  

Non-April 15 due dates. Any taxpayers who have filing or payment due dates other than April 15 have not been granted relief at this time.

Payroll and excise taxes. Under the Notice, normal filing, payment, and deposit due dates continue to apply to both payroll and excise taxes.

Estate and gift taxes. Normal filing and payment due dates continue to apply to estate and gift taxes.

Sec. 965(h) installment payments. The relief applies to Code Sec. 965 installment payments due on April 15, 2020. Although the Code Sec. 965(h) installment payment is generally made in respect of a taxpayer's 2017 or 2018 tax year, under Code Sec. 965(h)(2), the due date of the installment payment associated with a 2019 tax return is the due date of the taxpayer's 2019 Federal income tax return. 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 Code Sec. 965 installment payment has also been postponed to July 15, 2020.

Estimated payments under BEAT. 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 Code Sec. 59A Base Erosion and Anti-Abuse Tax (BEAT) payment has been postponed to July 15, 2020.

Information returns. The relief doesn't apply to information returns. It only applies to the filing of Federal income tax returns due on April 15, 2020. Information returns such as form 3520 and form 709 must be filed by the due date. Or an extension, in the regular course, filed.

Filing/paying taxes issues. The following FAQs address filing returns and paying taxes:

No current action needed. To get the relief, nothing need be done except file and pay any tax due with your return by July 15. You don't need to file any additional forms or call IRS to qualify for this automatic Federal tax filing and payment relief.

Filing extension beyond July 15. If you are an individual, you can request an automatic extension to file your Federal income tax return if you can't file by the July 15 deadline. You can request a filing extension to electronically file Form 4868 through your tax professional, tax software, or using the Free File link on Businesses, including trusts, must file Form 7004. 

You must request the automatic extension by July 15, 2020. 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 October 15, 2020. To avoid interest and penalties when filing your tax return after July 15, 2020, pay the tax you estimate as due with your extension request. (FAQ 12)

Already filed but haven't paid. If you have already filed but haven't fully paid the taxes due, to avoid interest and penalties, pay your taxes in full by July 15, 2020. (FAQ 13)

Already filed and scheduled an April 15 payment. A scheduled payment will not be automatically rescheduled to July 15. If you do nothing, the payment will be made on the date you chose. Here is information on how to cancel and reschedule your payment:

If you scheduled a payment through IRS Direct Pay, you can use your confirmation number from the payment to access the Look Up a Payment feature. You can modify or cancel a scheduled payment until two business days before the payment date. The email notification you received when you scheduled the payment will contain the confirmation number.

If you scheduled a payment through Electronic Federal Tax Payment System (EFTPS), click on Payments from the EFTPS home page, login, then click Cancel a Tax Payment from the left menu and follow the instructions. You must do so at least two business days before the scheduled payment date.

If you scheduled a payment as part of filing your tax return (authorizing an electronic funds withdrawal), you may revoke (cancel) your payment by contacting the U.S. Treasury Financial Agent at 888-353-4537. You must call to make a payment cancellation request no later than 11:59 p.m. ET two business days prior to the scheduled payment date.

If you scheduled a payment by credit card or debit card, contact the card processor to cancel the card payment.

State tax liabilities. This relief applies only to Federal income tax payments. State filing and payment deadlines vary and are not always the same as the Federal filing and payment deadline.

June 15, 2020 estimates. June 15, 2020 estimates have not been postponed. These second quarter 2020 estimated income tax payments are still due on June 15, 2020.

IRAs and workplace-based plans. The following FAQs address issues involving IRAs and workplace-based plans:

IRAs. The Notice's relief applies to IRA contributions. IRA contributions for 2019 are due by the tax filing deadline. Thus, 2019 IRA contributions can be made by July 15.

In addition, if a taxpayer owes a 10% additional tax on a 2019 IRA distribution, the reporting and payment of the 10% additional tax has been extended to July 15.

Excess elective deferrals. Under Code Sec. 402(g), an employee can elect to defer a portion of compensation into an employer-sponsored plan. The maximum that can be deferred in 2019 was $19,000. Any excess elective deferrals (and income) have to be removed by April 15, 2020. The Notice does not extend this time.

Employer contributions to qualified plans. In general, an employer contribution made to a qualified plan after the end of a tax year, but no later than the due date of the return for that tax year is considered to have been made on the last day of that year. (Code Sec. 404(a)(6)) This is sometimes referred to as the grace period.

If an employer has a federal income tax return due date of April 15, then the Notice extends the grace period to July 15.

HSAs and MSAs. The following FAQs address issues involving Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (MSAs):

…HSA and Archer MSAs. A taxpayer can make a contribution to an HSA or MSA, for a particular year, by the due date for filing the taxpayer's tax return. Because the due date for filing 2019 Federal income tax returns is now July 15, 2020, under the Notice, a taxpayer may make contributions to an HSA or MSA for 2019 by July 15, 2020.

Other questions. The following FAQs address other issues:

Filing refund claim for 2016. For individuals, in general, a refund claim for 2016 has to be made by April 15, 2020. The Notice does not extend this date since the Notice only applies to 2019 income tax returns. The Notice does not extend relief to any filings or payments for the 2016 tax year. (FAQ 22)

Form 4446. Corporations must file Form 4446, Corporation Application for Quick Refund of Overpayment of Estimated Tax, after the end of the corporation's tax year, and no later than the due date for filing the corporation's tax return (not including extensions). Form 4466 must be filed before the corporation files its tax return. (Instructions to Form 4446). The Notice does not extend the time to file Form 4446. The FAQs point out that a corporation may request its refund by filing its income tax return.

2019 estimated tax payments. The Notice's relief does not apply to 2019 estimated tax payments or penalties for failure to timely make 2019 estimated tax payments. The FAQs point out that relief from the penalty may be available under the normal rules by filing a Form 2210 (Underpayment of Estimated Tax by Individuals, Estates, and Trusts) or Form 2220 (Underpayment of Estimated Tax by Corporations). (FAQ 24)

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