IRS Releases FAQs to Income Tax Filing and Payment Relief
On March 24, 2020, the Internal Revenue Service (IRS) released frequently asked questions (FAQs) to supplement the prior guidance issued in Notice 2020-18. We previously commented on Notice 2020-18 and we have also summarized the key provisions in the FAQs regarding certain contribution deadlines. The IRS maintains resources for taxpayers regarding coronavirus on its website, including the FAQs.
The FAQs provide clarity on a number of income tax filing and payment issues. The new rules are:
Applicable Due Dates
- The income tax filing and payment deferral from April 15, 2020 to July 15, 2020 only applies to 2019 income taxes and first quarter 2020 estimated tax payments that are due on April 15, 2020. Estimated tax payments for the second quarter of 2020 that are due on June 15, 2020 are still due on June 15, 2020 even though there is a deferral for the estimated tax payments for the first quarter of 2020 (FAQ 16).
- As long as an applicable income tax return is filed by July 15, 2020, no extension needs to be filed by April 15, 2020 (FAQ 11).
- If an applicable income tax return is not filed by July 15, 2020, the automatic filing extension rules will continue to apply (such as filing Form 4868 and Form 7004), so an extension should be filed by July 15, 2020. The extension will be for an additional three months through the normal October 15, 2020 due date (FAQ 12). As the IRS previously noted, tax payments need to be made by July 15, 2020 in order to avoid interest, penalties and additions to tax for the period from April 15, 2020 through July 15, 2020, so tax payments should be made (under the normal rules) if an extension is filed.
- If an applicable income tax return has (or will be) filed before April 15, 2020 without payment of the tax, there will be no interest, penalties and additions to tax as long as the payment is made in full by July 15, 2020 (FAQ 13). If an applicable income tax return was filed and electronic payment was scheduled for payment on April 15, 2020, this payment will not be automatically rescheduled to July 15, 2020. Instead, you need to cancel the payment and reschedule the payment for a date on or before July 15, 2020 (FAQ 14).
- For fiscal year filers, the filing and payment relief only applies if the 2019 applicable income tax return was due on April 15, 2020, both for returns with an original due date or an extended due date of April 15, 2020 (FAQ 4).
- The filing and payment relief applies to certain income tax returns due April 15, 2020, not federal information returns (FAQ 10) or income tax returns due on other dates, such as May 15, 2020 and June 15, 2020 (FAQ 5).
- The applicable income tax returns are:
- Form 1040 (including Form 1040-SR, Form 1040-NR, Form 1040-NR-EZ, Form 1040-PR and Form 1040-SS),
- Form 1041 (including Form 1041-N and Form 1041-QFT),
- Form 1120 (including Form 1120-C, Form 1120-F, Form 1120-FSC, Form 1120-H, Form 1120-L, Form 1120-ND, Form 1120-PC, Form 1120-POL, Form 1120-REIT, Form 1120-RIC, and Form 1120-SF), and
- Form 8960 (Net Investment Income Tax) and Form 8991 (Tax on Base Erosion Payment of Taxpayers with Substantial Gross Receipts) (FAQ 3).
- Form 990-T (Exempt Organization Business Income Tax Return) that is due April 15, 2020 is also subject to the filing and tax payment relief (FAQ 3). However, there is no extension if a Form 990-T is due on May 15, 2020 (FAQ 3).
- 2019 income tax returns for calendar year taxpayers that were due on March 15, 2020, such as Form 1065 and Form 1065-B for partnerships, Form 1066 for U.S. real estate mortgage investment conduit, and Form 1120-S for Subchapter S corporations, are not eligible for the relief (FAQ 3). These returns were presumably put on extension.
- The relief does not apply to estate and gift taxes (FAQ 7) or payroll and excise taxes (FAQ 6).
- An installment payment that was due on April 15, 2020 under Code Section 965(h) relating to the repatriation tax is now deferred until July 15, 2020 if the income tax return that reports the payment is also deferred (FAQ 8).
- An estimated tax payment for a corporation that was due on April 15, 2020 under Code Section 59A relating to the base erosion and anti-abuse tax (commonly known as BEAT) is also deferred until July 15, 2020 if the income tax return that reports the payment is also deferred (FAQ 9).
If you have questions or would like additional information, please contact John Eagan (firstname.lastname@example.org; 212.868.4835) or another member of the Tax and Estates Group.
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