In Notice 2020-23, the IRS and Treasury Department extended until July 15, 2020, almost all tax filing and payment deadlines falling on or after April 1, 2020, and before July 15, 2020. Expanding on earlier notices in response to the COVID-19 pandemic, this relief applies to individuals, estates, corporations, and other non-corporate tax filers, including fiscal-year filers. For more information, see Tax Alert 2020-0961.

While listing specific forms and payments subject to relief, Notice 2020-23 also extends relief to the full list of "time-sensitive actions" listed in Revenue Procedure 2018-58 (which lists actions that can be postponed due to a federally declared disaster). Included in this list are the 45-day identification period and the 180-day exchange period under IRC Section 1031 for like-kind exchanges.

When a taxpayer enters into a like-kind exchange, the taxpayer is generally required to identify replacement property within 45 days and acquire replacement property within 180 days of the sale of the relinquished property. Under Notice 2020-23, a taxpayer whose 45-day identification period or 180-day exchange period ends between April 1 through July 14 has until July 15 to complete the identification or exchange. The same extension likely applies to safe harbor parking transaction exchange periods because Revenue Procedure 2000-37 is referenced in Revenue Procedure 2018-58.

Notice 2020-23 also includes as a "time-sensitive action" a taxpayer's election to invest in a qualified opportunity fund (QOF) under IRC Section 1400Z-2(a)(1)(A). That provision requires a taxpayer to generally invest in a QOF during the 180-day period beginning on the date of the sale or exchange giving rise to the gain. Under Notice 2020-23, taxpayers have until July 15 to make the election if the 180-day-period ends April 1 through July 14.

Implications

Notice 2020-23 provides welcome relief to taxpayers who have otherwise consummated like-kind exchange or QOF transactions that begin the running of statutory time periods. This relief addresses the impact of the COVID-19 pandemic on the ability to effectuate subsequent required actions.

The Notice 2020-23 relief will permit taxpayers who have sold property with the intention of entering into a like-kind exchange to identify or close on such acquisition of replacement property at a later date. Moreover, Notice 2020-23 will permit taxpayers who have triggered capital gain with the intention of deferring current gain recognition by making an investment in a qualified opportunity zone with additional time in which to make such an investment.

At this point, although Notice 2020-23 was beneficial to certain taxpayers, it has left uncertainty concerning whether (1) the 120-day extension period under Revenue Procedure 2018-58 was triggered by Notice 2020-23 and (2) whether taxpayers are required to extend the identification and/or exchange period if the earlier existing dates would have been more beneficial. The tax community has requested additional guidance and relief from the IRS but, until granted, taxpayers should consider the potential risks.

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