The IRS has issued Notice 2020-23 which effectively extends about 300 deadlines in connection with taxpayer filings, elections, payments and administrative actions as well as governmental actions. In a nutshell, multiple actions have been extended to July 15, 2020 involving a broad range of activities.
These extensions address both taxpayer concerns and reduced IRS workforces due to service center closures and social distancing procedures. Not only individuals, but businesses, tax-exempt organizations, estates and trusts will receive a number of the extensions.
Many of the extensions granted are made with reference to IRS Revenue Procedure 2018-58, 2018-50 I.R.B. _ which provided a comprehensive list of tax and administrative deadlines that might be affected by an emergency disaster declaration. While the Service might have simply adopted that procedure, the Service reserved – due to special circumstances and uniformity – to provide a specific, simplified approach to set a single date of July 15, 2020 for the performance of a multitude of actions that would have otherwise fallen within the period from April 1 through July 15, 2020 (the “Applicable Period”).
Specifically, Notice 2020-23 does the following:
- Expansion of the Types of Returns and the Payment of Taxes on Those Returns Covered. It delays the due date to July 15, 2020 if the filing or payment deadline (original, or with extension) would have otherwise fallen in the Applicable Period. It also specifies that any schedule required to be filed or election that must be made with such a return may be similarly delayed. While the Service had already extended individual income tax returns (i.e. Form 1040), also extended were income tax returns for partnerships, trusts, and estates. In addition, extensions are given to:
- Form 706 estate tax returns (all forms) and taxes;
- Form 8971 Information Regarding Beneficiaries Acquiring Property from a Decedent;
- Form 709 gift tax returns and payments; and
- Specified Form 990 returns, including Form 990-T Exempt Organization Business Income Tax Returns and payments;
- Refund Claims, Tax Court Petitions, or Suits for Refunds Extended. By cross-referencing Treasury Regulation § 7508A-1(c)(1)(iv)-(vi) the deadline for refund claims, Tax Court petitions, or suits for refunds are extended the to July 15, 2020 if the deadline would have otherwise fallen in the Applicable Period.
- Certain Tax Returns and Reports Not Reporting Tax Payment Delayed. Through its reference to IRS Revenue Procedure 2018-58, certain informational tax returns and reports not reporting a tax payment can be delayed to July 15, 2020, so long as the deadline (original, or with extension) would have otherwise fallen in the Applicable Period. For example, returns by exempt organizations on the Form 990 series and retirement plan reports on the Form 5500 series are included.
- Other Federal Tax Law Deadlines Extended. By referencing IRS Revenue Procedure 2018-58, certain actions for which a deadline would have fallen in the Applicable Period are extended. For example, the 45-day deadline for identifying replacement property and the 180-day deadline for closing on replacement property under IRC § 1031, if falling within the Applicable period, are extended to July 15, 2020. (See our separate article covering this in more detail).
- IRS Will Disregard Penalties and Interest. With respect to providing for the payment of tax, on account of the failure to file the specified forms or make the specified payments by the due dates that otherwise would have applied the Service will ignore the time period of April 1 – July 15, 2020 in calculating the amount of penalties, interest, or additions to tax. These will commence accruing on July 15, 2020.
- Extensions for Those Under Audit. Taxpayers under audit or before IRS Appeals who are required to respond within the Applicable Period will receive extensions of time to act or respond to July 15, 2020.
- Rolling Over Gain Into a Qualified Opportunity Fund Extended. The deadline (normally 180 days after gain realization from another investment) for the rollover of gain into a qualified opportunity fund (QOF) under IRC § 1400Z-2 is extended to July 15, 2020 if the deadline would have otherwise fallen within the Applicable Period.
- Estimated Tax Payments Postponed. The June 15, 2020 deadline for estimated tax payments is now postponed to July 15, 2020. The installments of estimated tax due April 15, 2020 is reconfirmed as extended to July 15, 2020.
- Filing For Unclaimed 2016 Refunds Extended. The April 15 deadline for filing a 2016-year tax return/amendment in order to claim a refund is extended to July 15, 2020.
- IRC § 965(h) Installment Payments Postponed. Installment payments under IRC § 965(h) that were due during the applicable period are postponed to July 15, 2020.
- Americans Living Abroad. Americans who live and work abroad can wait to file their 2019 federal income tax return and pay any tax due until July 15, 2020.
Caution: Period for Performing Acts Not Suspended. Most filings, payments and the performance of certain actions with a deadline falling in the Applicable Period are extended to July 15, 2020, but this does not “toll” the deadline for acts that are due after July 15, 2015 to permit a later date. For example, with respect to a Section 1031 tax-deferred exchange where the relinquished property closed on March 2, 2020, the 45-day deadline for identifying replacement property normally would be April 15, 2020 and the 180-day deadline for closing on replacement property would be Friday, August 28, 2020. While the identification deadline is delayed to July 15, 2020, the the August 28, 2020 deadline to close on replacement property remains unchanged.
As noted above, the COVID-19 pandemic has made it difficult for IRS employees, taxpayers, and others to access documents, systems, or other resources due to office closures and social distancing requirements. Thus, Notice 2020-23 also gives the IRS an extra 30 days to perform certain time-sensitive acts if the last date for performance is on or after April 6, 2020 and before July 15, 2020.
More guidance is sure to come from the Treasury and IRS.
In addressing deadlines, it is important to confer with a tax attorney to make sure that deadlines are met, where in some instances, taxpayers may need to request alternative relief. Our attorneys have been advising clients in Northern California on addressing their tax and legal issues, including the most recent COVID-19 tax developments. Please contact any one of our tax attorneys for assistance.
