Last Friday, the IRS superseded and expanded guidance issued earlier in the week by giving certain taxpayers an extra three months to file and pay their taxes.
Notice 2020-18 provides that any individual, corporation, partnership, trust or estate with a 2019 federal income tax return due April 15, 2020 will now have until July 15, 2020 to file the return. In addition, any 2019 federal income tax liability or first quarter 2020 estimated income tax payment (including payment of self-employment tax) that was originally due on April 15, 2020 is also now due July 15, 2020.
The extension of time to file and pay taxes until July 15, 2020 is automatic; no form is required to be filed. In addition, as opposed to previous guidance, there is no limit to the amount of income tax that was originally due on April 15 that may now be paid on July 15 without the imposition of penalties and interest. If tax returns and payment of income tax that were due on April 15, 2020 are not filed and paid by July 15, 2020, however, the IRS will begin assessing penalties and interest on July 16, 2020.
On Tuesday morning, the IRS published additional guidance addressing the delayed filing deadline. That guidance addresses many key questions, including the due date of federal extensions, the treatment of fiscal year filers, and the timing of IRA contributions. The guidance is presented below in question and answer format:
Q: What are the form numbers of the specific Federal income tax returns whose returns were ORIGINALLY due on April 15th for calendar year 2019 that are now due on July 15th?
A: 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
- Form 8991
- 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.
Q: I am a fiscal year filer. My Federal income tax return for fiscal year 2019 is due on April 15, 2020 (for example, I had a June 30, 2019 corporate return that was originally due on October 15th, 2019 but was extended until April 15th, 2020) Am I eligible for relief under the Notice?
A: Yes, the relief provided in the Notice applies to Federal income tax returns and payments in respect of a taxpayer’s 2019 taxable year, and postpones those 2019 return filings and payments due on April 15, 2020 until July 15, 2020. If your Federal income tax return for your fiscal year ending during 2019 is due on April 15, 2020, whether that is the original due date or the due date on extension, your due date is postponed to July 15, 2020.
Q: What about businesses or other entities that have filing due dates on May 15, June 15, or some other date besides April 15. Have their filing and payment deadlines been postponed?
A: No, any taxpayers who have filing or payment due dates other than April 15 have not been granted relief at this time.
Q: Does the relief provided in the Notice apply to payroll or excise taxes?
A: No, under the Notice, normal filing, payment, and deposit due dates continue to apply to both payroll and excise taxes.
Q: Does the relief provided in the Notice apply to estate and gift taxes?
A: No, normal filing and payment due dates continue to apply to estate and gift taxes.
Q: What if I am unable to file my 2019 income tax return that would have been due on April 15 by July 15, 2020? When must I file for an extension by, April 15th or July 15th?
A: 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 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.
Q: The Notice postpones the deadline for first quarter 2020 estimated income tax payments due on April 15, 2020. What about second quarter estimated tax payments due on June 15? Have they been postponed as well?
A: No, second quarter 2020 estimated income tax payments are still due on June 15, 2020. First quarter 2020 estimated income tax payments are postponed from April 15 to July 15, 2020.
Q: Does this relief provide me more time to contribute money to my IRA for 2019?
A: Yes. Contributions can be made to your IRA, for a particular year, at any time during the year or by the due date for filing your return for that year. Because the due date for filing Federal income tax returns has been postponed to July 15, the deadline for making contributions to your IRA for 2019 is also extended to July 15, 2020.
Q: For employers with a federal income tax return due date of April 15, 2020, is the end of the grace period under Section 404(a)(6) to make contributions to their qualified retirement plans on account of 2019 also July 15, 2020 as a result of this relief?
A: Yes, because these employers are Affected Taxpayers under Notice 2020-18 for whom the due date for filing Federal income tax returns and making Federal income tax payments that would be due April 15, 2020, is now July 15, 2020, the end of the grace period for these employers is also July 15, 2020 under this relief. So, for example, if an employer is a corporation with an April 15, 2020 due date for filing the Form 1120, then the grace period under Section 404(a)(6) for the employer to make contributions to its workplace-based retirement plan that are treated as made on account of 2019 ends on July 15, 2020.
Q: Does this relief provide me more time to contribute money to my HSA or Archer MSA for 2019?
A: Yes. Contributions may be made to your HSA or Archer MSA, for a particular year, at any time during the year or by the due date for filing your return for that year. Because the due date for filing Federal income tax returns is now July 15, 2020, under this relief, you may make contributions to your HSA or Archer MSA for 2019 at any time up to July 15, 2020.
Q: I want to file a claim for a refund for 2016, which must be filed by April 15, 2020 to be timely. Does this relief give me more time to claim my 2016 refund?
A: No, the relief provided for filing Federal income tax returns applies only to Federal income tax returns for the 2019 taxable year. The Notice does not extend relief to any filings or payments for taxable year 2016.
It is possible that additional relief may still be forthcoming. In addition, attention now turns to each state to see how they will address the relief published by the IRS. RubinBrown will continue to monitor the federal and state legislation, and provide updates as the information becomes available.
By: Tony Nitti, CPA, MST
Readers should not act upon information presented without individual professional consultation.
Any federal tax advice contained in this communication (including any attachments): (i) is intended for your use only; (ii) is based on the accuracy and completeness of the facts you have provided us; and (iii) may not be relied upon to avoid penalties.