IRS COVID-19 Extensions of Time Provide Relief to Taxpayers
- The Internal Revenue Service (IRS) has provided taxpayers with needed relief by delaying the due dates with respect to various filings and payments during the coronavirus (COVID-19) pandemic.
- This Holland & Knight alert summarizes the important aspects of recent IRS guidance, including Notice 2020-23, which offers extensions of time relief to taxpayers.
The Internal Revenue Service (IRS) has provided taxpayers with needed relief by delaying the due dates with respect to various filings and payments during the coronavirus (COVID-19) pandemic. This relief has been announced in multiple IRS Notices and FAQs available on the IRS website. This Holland & Knight alert summarizes the important aspects of the IRS relief.
IRS Notice 2020-18 granted affected taxpayers an automatic postponement until July 15, 2020, for 2019 income tax payments and returns and for 2020 estimated income tax payments. (See Holland & Knight's previous alert, "Business Tax Incentives and Relief Resulting from COVID-19 Response," March 30, 2020.) In later Notice 2020-20, the IRS extended the postponement relief to federal gift tax or generation-skipping transfer tax payments due or the requirement to file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. As a result, the due dates for such payments or forms are automatically postponed to July 15, 2020, and no interest, penalties or additions to tax will be calculated during the available deferral period.
Broad Extension for Filing Most Returns and Tax Payments
Notice 2020-23 significantly broadens the earlier relief by extending the filing and payment postponement period to numerous additional federal tax filings. The due date for the following payments and filings that were due on or after April 1, 2020, and before July 15, 2020, are automatically postponed until July 15, 2020:
- individual income tax payment and return filings on Form 1040 series
- calendar year or fiscal year corporate income tax payments and return filings on Forms 1120 series
- calendar year or fiscal year partnership and real estate mortgage investment conduit (REMIC) return filings on Form 1065 and Form 1066, respectively
- estate and trust income tax payments and return filings on Form 1041 series
- estate and generation-skipping transfer tax payment and return filings on Forms 706 and Form 706 filed pursuant to Revenue Procedure 2017-34
- gift and generation-skipping transfer tax payment and return filings on Form 709
- estate tax payments of principal or interest due as a result of certain elections and requirements under Internal Revenue Code (IRC) Section 6166, 6161, 6163 and 6166
- exempt organization business income tax and other payments and return filings
- certain excise tax payments and return filings (including private foundation excise taxes and excise taxes imposed under Chapters 41 and 42 of the IRC)
- quarterly estimated income tax payments (including those payable for self-employment income, and estimated income taxes on unrelated business taxable income of tax-exempt organizations)
- installment payments under IRC Section 965(h) (i.e., those payments due during the period specified in the Notice)
The relief includes not just the specified returns and forms, but also all schedules, returns and other forms that are filed as attachments to such forms or that are required to be filed by the due date of the specified forms. Examples of these additional forms include Schedule H and Schedule SE, as well as Forms 3520, 5471, 5472, 8621, 8858, 8865 and 8938.
While taxpayers may obtain extensions to file a form or return beyond July 15, 2020, the extension date may not go beyond the original statutory or regulatory extension date.
No interest, penalty or addition to tax for failure to file a specified form or making a specified payment will be imposed during the deferral period. In addition, any elections that are made or required to be made on a timely filed specified form or return (or attachment to a specified form or return) shall be deemed to be timely made if filed on such form, return or attachment, as appropriate, on or before July 15, 2020.
Relief for Broad Categories of "Time-Sensitive" Actions
Notice 2020-23 also provides an extension period until July 15, 2020, for certain other "time-sensitive actions" that are otherwise due to be performed on or after April 1, 2020, and before July 15, 2020. The specified time-sensitive actions include those listed in either § 301.7508A-1(c)(1)(iv) – (vi) of the Procedure and Administration Regulations or Revenue Procedure 2018-58.
The Notice specifically provides relief for filing all petitions with the Tax Court, or for review of a decision rendered by the Tax Court, filing a claim for credit or refund of any tax and bringing suit upon a claim for credit or refund of any tax. The Notice also specifically extends the 180-day period to invest eligible capital gains in a qualified opportunity fund in order to be able to elect benefits under the opportunity zone tax incentive to July 15, 2020.
In addition to those time-specified actions specifically listed in Notice 2020-23, Revenue Procedure 2018-58 identifies a lengthy and detailed series of time-sensitive actions that are grouped into categories that may affect broad groups of taxpayers. Among the actions that are postponed are:
- the 75-day filing due date for the retroactive effective date of an entity classification election made by filing Form 8832
- the 45-day identification period and the 180-day exchange period for Section 1031 exchanges
- certain acts relating to the adoption, election, retention or change of any accounting method or period (including those made on IRS forms 1128 or 3115)
- certain distributions and contributions from retirement plans
- the filing due date for Form 5500 series
- elections with respect to the treatment of subsidiaries as qualified subchapter S subsidiaries or their revocations
- certain corporate transaction period required (e.g., under Code Sections 332 and 338), and
- other partnership, corporate or trust election due dates
Relief for IRS "Time-Sensitive" Actions
Notice 2020-23 also provides the IRS a 30-day postponement for certain time-sensitive actions if the last date to perform such action is on or after April 6, 2020, and before July 15, 2020. The extension includes actions with respect to the following taxpayers:
- persons who are under examination
- persons whose cases are with the Independent Office of Appeals
- persons who, during the period beginning April 6, 2020, and ending before July 15, 2020, file amended returns or submit payments with respect to a tax for which the time for assessment would otherwise expire during this period
Further Net Operating Loss (NOL) Relief
Notice 2020-26 provides another area of relief by granting a six-month extension (for a total of 18 months) for filing an application for a tentative adjustment with respect to the carryback of an NOL that arose in any taxable year that began during calendar year 2018 and that ended on or before June 30, 2019.
Taxpayers that elect to waive the carryback period of an NOL arising in a taxable period beginning in 2018 or 2019 shall keep in mind that under Revenue Procedure 2020-24 such election must be made by attaching to its federal income tax return for the first taxable year ending after March 27, 2020, a separate statement for each taxable year for which the taxpayer intends to make the election.
FATCA Reporting Relief
In several statements, the IRS also provided the following extensions with respect to Foreign Account Tax Compliance Act (FATCA) reporting:
- Model 2 foreign financial institutions (FFIs) or Participating FFIs will have until July 15, 2020, to file the FATCA Report (Form 8966) and
- Model 1 intergovernmental agreement (IGA) jurisdictions will have until Dec. 31, 2020, to provide their FATCA data for tax year 2019 to the U.S. Competent Authority
The IRS is expected to continue to issue additional formal and informal guidance to address COVID-19-related matters, including those relating to the extended time periods discussed in this alert. Holland & Knight will continue to monitor any developments and issue timely insights to address these updates. For more information, contact the authors or another member of Holland & Knight's Taxation Team.
DISCLAIMER: Please note that the situation surrounding COVID-19 is evolving and that the subject matter discussed in these publications may change on a daily basis. Please contact your responsible Holland & Knight lawyer or the authors of this alert for timely advice.
Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.