On April 9, 2020, the IRS announced additional relief to taxpayers by moving the due date for more deadlines to July 15, 2020. Let’s discuss this additional July 15 Deferral in more detail.
July 15 Deferral: Background Information
On March 13, 2020, in response to the 2019 coronavirus (also called “COVID-19″) pandemic, President Trump issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. This declaration instructed the Treasury Department to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency pursuant to 26 U.S.C. §7508A(a).
Section 7508A of the Internal Revenue Code provides the Secretary of the Treasury with authority to postpone the time for performing certain acts under the internal revenue laws for a taxpayer determined by the Secretary to be affected by a federally-declared disaster as defined in section 165(i)(5)(A). Pursuant to section 7508A(a), a period of up to one year may be disregarded in determining whether the performance of certain acts is timely under the internal revenue laws.
On March 18, 2020, the IRS issued Notice 2020-17 to postpone April 15 tax payment deadlines from April 15 to July 15, 2020. A few days later, on March 21, 2020 (the actual relief occurred even earlier on March 20, 2020), among other measures, the IRS announced a new notice 2020-18 for the extension of all April 15 deadlines to July 15, 2020. This extension applied only to the April 15 deadlines.
Later, on March 27, 2020, the IRS issued Notice 2020-20, which amplified the earlier notice 2020-18 and postponed certain federal gift tax return filings and payments to July 15, 2020.
July 15 Deferral: More Deadlines Affected
On April 9, 2020, the IRS took another decisive step forward and issued Notice 2020-23. This notice extends to July 15 all tax deadlines that fall on or after April 1, 2020 and July 14, 2020. This deferral applies to all tax filing and tax payment deadlines.
The July 15 deferral of deadlines applies to all taxpayers – individuals, trusts, estates, corporations and other non-corporate tax filers.
July 15 Deferral: Taxpayers Residing Abroad
Americans who reside abroad usually get an automatic extension to file their tax returns until June 15, but they are required to pay taxes due by April 15. Notice 2020-23 defers the tax payment and the tax filing deadlines from April 15 and June 15 respectively to July 15, 2020.
July 15 Deferral: Individual Tax Returns
Notice 2020-23 applies to the following types of individual tax returns and tax payments:
- Form 1040, U.S. Individual Income Tax Return, 1040-SR, U.S. Tax Return for Seniors;
- 1040-NR, U.S. Nonresident Alien Income Tax Return;
- 1040-NR-EZ, U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents;
- 1040-PR, Self-Employment Tax Return – Puerto Rico; and
- 1040-SS, U.S. Self-Employment Tax Return (Including the Additional Child Tax Credit for Bona Fide Residents of Puerto Rico);
July 15 Deferral: Corporate Tax Returns
Notice 2020-23 applies to the following types of corporate tax returns and tax payments (irrespective of whether they are calendar-year or fiscal-year taxpayers):
- Form 1120, U.S. Corporation Income Tax Return;
- 1120-C, U.S. Income Tax Return for Cooperative Associations;
- 1120-F, U.S. Income Tax Return of a Foreign Corporation;
- 1120-FSC, U.S. Income Tax Return of a Foreign Sales Corporation;
- 1120-H, U.S. Income Tax Return for Homeowners Associations;
- 1120-L, U.S. Life Insurance Company Income Tax Return;
- 1120-ND, Return for Nuclear Decommissioning Funds and Certain Related Persons;
- 1120-PC, U.S. Property and Casualty Insurance Company Income Tax Return;
- 1120-POL, U.S. Income Tax Return for Certain Political Organizations;
- 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts;
- 1120-RIC, U.S. Income Tax Return for Regulated Investment Companies;
- 1120-S, U.S. Income Tax Return for an S Corporation; and
- 1120-SF, U.S. Income Tax Return for Settlement Funds (Under Section 468B).
July 15 Deferral: Partnership Tax Returns
Notice 2020-23 applies to the following types of partnership calendar-year and fiscal-year tax returns:
- Form 1065, U.S. Return of Partnership Income; and
- Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return.
July 15 Deferral: Estate, Gift and Trust Tax Returns
Notice 2020-23 applies to the following types of estate, gift and trust tax returns (including all tax payments required to be made under these returns):
- Form 1041, U.S. Income Tax Return for Estates and Trusts;
- 1041-N, U.S. Income Tax Return for Electing Alaska Native Settlement Trusts;
- 1041-QFT, U.S. Income Tax Return for Qualified Funeral Trusts;
- Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return (for estate of a citizen or resident of the United States), including for filings pursuant to Revenue Procedure 2017-34;
- 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return (for estate of a nonresident not a citizen of the United States);
- 706-A, United States Additional Estate Tax Return;
- 706-QDT, U.S. Estate Tax Return for Qualified Domestic Trusts;
- 706-GS(T), Generation-Skipping Transfer Tax Return for Terminations;
- 706-GS(D), Generation-Skipping Transfer Tax Return for Distributions;
- 706-GS(D-1), Notification of Distribution from a Generation-Skipping Trust (including the due date for providing such form to a beneficiary);
- Form 8971, Information Regarding Beneficiaries Acquiring Property from a Decedent and any supplemental Form 8971, including all requirements contained in section 6035(a) of the Code; and
- Estate tax payments of principal or interest due as a result of an election made under sections 6166, 6161, or 6163 and annual recertification requirements under section 6166 of the Code.
July 15 Deferral: Tax-Exempt Tax Returns
Notice 2020-23 applies to Form 990-T, Exempt Organization Business Income Tax Return (and proxy tax under section 6033(e) of the Code).
July 15 Deferral: Excise Taxes
Notice 2020-23 applies to excise tax payments on investment income and return filings on Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation as well as excise tax payments and return filings on Form 4720, Return of Certain Excise Taxes under Chapters 41 and 42 of the Internal Revenue Code.
July 15 Deferral: Quarterly Estimated Tax Payments
Notice 2020-23 applies to various types of quarterly estimated income tax payments calculated on or submitted with the following forms:
- 990-W, Estimated Tax on Unrelated Business Taxable Income for Tax-Exempt Organizations,
- 1040-ES, Estimated Tax for Individuals;
- 1040-ES (NR), U.S. Estimated Tax for Nonresident Alien Individuals;
- 1040-ES (PR), Estimated Federal Tax on Self Employment Income and on Household Employees (Residents of Puerto Rico);
- 1041-ES, Estimated Income Tax for Estates; and Trusts; and
- 1120-W, Estimated Tax for Corporations.
July 15 Deferral: Certain Other Affected Taxpayers and Elections; Tax Court Deadlines
Notice 2020-23 also applies to any person performing a time-sensitive action listed in either § 301.7508A-1(c)(1)(iv) – (vi) of the Procedure and Administration Regulations or Revenue Procedure 2018-58, 2018-50 IRB 990 (December 10, 2018), which is due to be performed on or after April 1, 2020, and before July 15, 2020 (“Specified Time-Sensitive Action”). For purposes of this notice, the term Specified Time-Sensitive Action also includes an investment at the election of a taxpayer due to be made during the 180-day period described in the IRS §1400Z-2(a)(1)(A).
Affected Taxpayers also have until July 15, 2020, to perform all Specified Time-Sensitive Actions, that are due to be performed on or after April 1, 2020, and before July 15, 2020. This relief includes the time 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. This notice does not provide relief for the time period for filing a petition with the Tax Court, or for filing a claim or bringing a suit for credit or refund if that period expired before April 1, 2020.
July 15 Deferral: Schedules, Elections and Other Forms
Notice 2020-23 applies not only to the aforementioned forms (hereinafter “Specified Forms), but also to schedules, returns, and other forms that are filed as attachments to the Specified Forms or are required to be filed by the due date of the Specified Forms. For example, this affects Schedule H and Schedule SE.
Moreover, elections that are made or required to be made on a timely filed Specified Form (or attachment to a Specified Form) shall be timely made if filed on such Specified Form or attachment, as appropriate, on or before July 15, 2020
July 15 Deferral: International Information Returns and 965 Tax Payments
Notice 2020-23 applies to all US international information returns including forms 3520, 5471, 5472, 8621 (including PFIC elections), 8858, 8865, and 8938. Furthermore, the Notice applies to installment payments under section 965(h) due on or after April 1, 2020, and before July 15, 2020.
This is highly important to Sherayzen Law Office clients’ because almost all of our clients must file these forms and many are required to make 965 installment tax payments.
July 15 Deferral: 2016 Unclaimed Refunds
For 2016 tax returns, the normal April 15 deadline to claim a refund has also been extended to July 15, 2020. The law provides a three-year window of opportunity to claim a refund. If taxpayers do not file a return within three years, the money becomes property of the U.S. Treasury. Notice 2020-23 requires taxpayers to properly address, mail and ensure the tax return is postmarked by the July 15, 2020, date.
July 15 Deferral: IRS Audits, IRS Appeals and Amended Tax Returns
Notice 2020-23 provides a 30-day postponement for “Affected Taxpayers” with respect to “Time-Sensitive IRS Actions” if the last date for performance of the action is on or after April 6, 2020, and before July 15, 2020.
Notice 2020-23 defines “Affected Taxpayers” as:
- Persons who are currently under examination (including an investigation to determine liability for an assessable penalty under subchapter B of Chapter 68);
- Persons whose cases are with the Independent Office of Appeals; and
- Persons who, during the period beginning on or after April 6, 2020 and ending before July 15, 2020, file written documents described in section 6501(c)(7) of the Code (amended returns) or submit payments with respect to a tax for which the time for assessment would otherwise expire during this period.
Notice 2020-23 defines “Time Sensitive IRS Action” as actions described in § 301.7508A-1(c)(2).
July 15 Deferral: Extension of time to file beyond July 15
It is still possible to request an extension of time beyond July 15, 2020 (to October 15, 2020). In order to do it, individual taxpayers must file Form 4868 and business taxpayers must file Form 7004. Both forms should be filed by July 15, 2020.
Taxpayers should keep in mind that an extension to file is not an extension to pay taxes. Taxpayers must estimated their tax liability and pay any taxes owed by July 15, 2020, even if they request an extension to file forms.