March 26, 2020 IRS expands April 15 tax relief and issues clarifying questions and answers In response to COVID-19, the IRS in Notice 2020-18 extended until July 15, 2020, the April 15 due date for filing federal income tax returns. Notice 2020-18 also removed the previously imposed caps on the payment amount that could be postponed so that taxpayers now have until July 15 to pay their entire tax liability without incurring penalties or interest. Notice 2020-18 supersedes Notice 2020-17, issued on March 18, 2020, in which the IRS postponed the April 15 payment deadline until July 15 and imposed certain caps on the amounts subject to relief (see Tax Alert 2020-0609). Subsequently, on March 24, 2020, the IRS released Filing and Payment Deadlines Questions and Answers (FAQs), clarifying Notice 2020-18. Expanded relief In Notice 2020-18, the IRS restates and expands the relief provided in Notice 2020-17 by applying the extended July 15 deadline to filings, as well as payments, that would have otherwise been due on April 15. FAQ 1 clarifies that the extensions provided apply to individuals, trusts, estates, corporations, and all types of unincorporated business entities. Taxpayers do not have to file Form 4868 to obtain an automatic extension for individual returns or Form 7004 for an automatic extension for business returns to receive filing relief. In addition, Notice 2020-18 eliminates the caps on income tax payments deferred from April 15 to July 15. The previous guidance had capped the amount of deferred payments at $1 million per individual taxpayer and $10 million for C corporations and consolidated groups. The filing and payment relief is only available for federal income tax returns and associated payments for the 2019 tax year due on April 15, and for federal estimated income tax payments for the 2020 tax year (including tax on self-employment income) due on April 15. According to FAQ 16, second-quarter 2020 estimated income tax payments are still due on June 15, 2020. The filing and payment extensions only apply to federal income tax and not any other tax type (e.g., excise, gift, or payroll taxes). The FAQs also state that Notice 2020-18 does not apply to information returns (FAQ 10). However, information returns that must be attached to the income tax forms listed in the FAQs should qualify for the extension relief. Finally, the extension available for estates applies only to income tax filings and payments, not to estate tax filings or payments (FAQ 7). For fiscal-year filers, if a federal income tax return for a fiscal year ending during 2019 is due on April 15, 2020, whether that is the original or extended due date, the filing due date is postponed until July 15, 2020 (FAQ 4). FAQ 22 clarifies that the filing relief applies only to federal income tax returns for the 2019 tax year. For example, a taxpayer whose 2016 refund claim is due by April 15, 2020, must still file by that date. Further, Notice 2020-18 does not postpone the time for filing Form 4466, Corporation Application for Quick Refund of Overpayment of Estimated Tax, although taxpayers may request a refund by filing an income tax return (FAQ 23). As such, Forms 4466 filed to obtain refunds for calendar taxpayers for 2019 are still due on April 15, 2020. Specific forms FAQ 3 specifies that Notice 2020-18 postpones the filing and payment of federal income taxes reported on the following forms:
Filing and payment deadlines for forms due on dates other than April 15 (such as Forms 990-T due on May 15, or Forms 1065, 1065-B, 1066 and 1120-S due on March 16, 2020) have not been postponed. IRC Section 965 installment payments and IRC Section 59A Base Erosion and Anti-Abuse Tax (BEAT) payments postponed FAQ 8 provides that payment relief applies to IRC Section 965 transition tax liability installment payments due on April 15, 2020: "For any taxpayer whose [f]ederal income tax return filing due date has been postponed from April 15 to July 15, 2020, the due date of that taxpayer's [IRC Section] 965 installment payment has also been postponed to July 15, 2020." FAQ 9 further provides that the relief also extends to BEAT payments due on April 15. Implications The FAQs provide much needed guidance in clarifying some of the questions surrounding Notice 2020-18. Questions remain for many taxpayers, however, as the Notice and FAQs only apply to certain federal tax payment deadlines. As Notice 2020-18 does not affect state tax obligations, taxpayers should seek consultation on any potential tax relief being offered by a particular state. For information on states that have extended filing and payment deadlines, see Tax Alert 2020-0659. ———————————————
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