The IRS issued guidance on April 9 providing for the same kind of relief of broad filing and payment relief that is typically reserved for natural disasters, in effect postponing all due dates beginning on April 1 to July 15 for virtually all taxpayers that are affected by COVID-19.
Under Notice 2020-23, any person (which includes an individual, corporation, trust, estate, partnership, association or company) with a federal tax payment or filing obligation due on or after April 1 and before July 15, or with an obligation to perform certain time sensitive actions in that same time period, will receive an automatic postponement of time to pay tax, file returns, or perform those action until July 15.
This notice amends previously issued guidance by the IRS over the past three weeks and applies to both calendar and fiscal year filers, as well as all persons as defined under Section 7701(a)(1) of the Code. In particular, certain outstanding issues concerning filing and payment due dates have generally been addressed in this notice, including postponing the due date to July 15 for:
- Filing Form 4466, “Corporation Application for Quick Refund of Overpayment of Estimated Tax”
- May 15 due dates for filing certain returns for tax-exempt entities
- Second Quarter Estimated Tax normally due on June 15
- The performance of acts described in Rev. Proc. 2018-58 and Treas. Reg. Sec. 301.7508A-1(c)(1)(iv)-(vi)
Notice 2020-23 does not by itself provide postponement relief from return and payment due dates prior to April 1. For example, the due dates for filing Forms 1065 and 1120-S for calendar-year partnerships and S corporations remain March 16, and the due date for filing certain information returns remains March 31. The IRS also recently issued Rev. Proc. 2020-23, which allows certain partnerships that are subject to the centralized partnership audit rules of the Bipartisan Budget Act of 2015 the ability to file amended returns for taxable years beginning in 2018 or 2019, assuming those partnerships have already filed Forms 1065 for those years.
The relief provided by the IRS in the latest notice covers the following filings and payments of tax due after April 1 and before July 15:
- Forms 1040, 1040-SR, 1040-NR, 1040-NR-EZ, 1040-PR, and 1040-SS
- Forms 1120, 1120-C, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-S, and 1120-SF
- Form 1065, Form 1066
- Forms 1041, 1041-N, 1041-QFT
- Forms 706, 706-NA, 706-A, 706-QDT, 706-GS(T), 706-GS(D), 706-GS(D-1), 706 (filed pursuant to Notice 2017-34)
- Form 8791
- Forms 709
- Estate tax payments of principal or interest due as a result of an election made under Sections 6166, 6161, or 6163 and annual recertifications under Section 6166
- Exempt organization business income tax payments and return filings on Form 990-T
- Excise tax payments on investment income on Form 990-PF and excise tax payments and return filings on Form 4720
- Quarterly estimated tax payments on Forms 990-W, 1040-ES, 1040-ES (NR), 1040-ES (PR), 1041-ES, and 1120-W
Importantly, the relief extends to the time-sensitive actions listed in either Treas. Reg. Sec. 301.7508A-1(c)(1)(iv)-(vi) or Rev. Proc. 2018-58. Both this regulation and Rev. Proc. 2018-58 contain hundreds of time-sensitive actions, including the time for filing certain forms and statements, and elections. The guidance also clarifies that schedules, returns or other forms required to be attached to a return for which the due date has been postponed, such as an international information return, will be considered timely filed if the return is timely filed. These attachments would include Forms 3520, 5471, 5472, 8621, 8858, 8865, and 8938.
Effect of postponement on time-sensitive actions
The postponement of time to perform the time-sensitive actions described in Treas. Reg. Sec. 301.7508A-1(c)(1)(iv)-(vi) and Rev. Proc. 2018-58 provides much-needed clarity. The actions covered are numerous, and include the due date for filing Form 4466, “Corporation Application for Quick Refund of Overpayment of Estimated Tax.” That form was due to be filed by April 15 prior to the issuance of this latest round of guidance. The postponement also covers the following common, time-sensitive actions:
- Adoption, election, retention or change in a method of accounting
- Changes in tax years filed on Form 1128
- Election to relinquish a carryback of a loss
- Entity classification elections on Form 8832
- Elections to treat stock purchases as asset acquisitions under Sections 338(g) and (h)(10)
- Section 83(b) elections
- Applications for recognition of exempt status on Form 1024
- Annual returns and information returns on Form 990 that must be filed by 15th day of the fifth month following the close of a taxable year
- Filing of Forms 8804 or 8805
- Certain procedural due dates, such as the due date for filing a collection due process hearing request
- The filing of Form 1139 or 1045 to apply for a tentative refund (But see Rev. Proc. 2020-24 and Notice 2020-26 for substantive and procedural guidance)
Postponement of time for IRS to perform certain actions
Notice 2020-23 provides significant relief to the IRS as well as taxpayers. Due to COVID-19, IRS employees may not be able to access certain records, documents, systems or other resources necessary to perform time-sensitive actions. The lack of access “will materially interfere with the IRS’s ability to timely administer the Code,” according to the notice.
Accordingly, with respect to certain “affected taxpayers,” the IRS will receive a 30-day postponement for time-sensitive IRS actions if the last date for performance of the action is on or after April 6 or before July 15. This postponement may be extended. Notice 2020-23 defines such “affected taxpayers” as those persons under examination (including an investigation to determine liability for an assessable penalty); persons with a case before the Independent Office of Appeals, or persons who file amended returns or make payments of tax for which the time for assessment would otherwise expire between April 6 and July 15.
The time-sensitive IRS acts for which a 30-day postponement is granted include assessing tax, giving or making any notice or demand for payment of tax; the collection of tax by levy or otherwise; bringing suit in respect of any liability in respect of tax, allowing a credit or refund, and other acts specified in IRS guidance.
Takeaway and next steps
The broad relief provided by Notice 2020-23 should provide most, if not all taxpayers, a postponement of time to file federal returns, pay federal tax, and perform certain actions required under the internal revenue laws. Nevertheless, taxpayers should review both Notice 2020-23 as well as the underlying guidance to which it relates, Treas. Reg. Sec. 301.7508A-1(c)(1)(iv)-(vi) and Rev. Proc. 2018-58, to ensure that they remain in compliance.
In addition, given the current operating status of the IRS, taxpayers should file any required tax returns or forms electronically if possible. As of April 10, all IRS service centers were closed or operating with a mission-critical staff. Paper-filed returns or submissions are not likely to be reviewed or processed in the near-term. Taxpayers who have already filed a return on paper should not re-file electronically.
Taxpayers that have no choice but to file on paper should do so through USPS certified or registered mail and retain their proof of timely filing. The use of private delivery services may not result in an actual delivery during this time.
To learn more visit gt.com/tax
David B. Auclair
David Auclair is National Managing Principal of the Washington National Tax Office. He consults with clients on a wide range of accounting method issues, including income recognition, deduction timing, capitalization of expenditures, and other specialized methods of tax accounting.
Washington DC, Washington DC
Dustin Stamper is a managing director in Grant Thornton’s Washington National Tax Office and leads the tax legislative affairs practice for the firm.
Washington DC, Washington DC
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