IRS Issues Guidance on the Extension of the filing and payment dates to July 15

IRS issued in Question & Answer format guidance concerning the extension of the time to file 2019 income tax returns normally due on April 15, 2020, and the time to pay the related taxed until July 15. This clarifies many open issues raised by the Service’s in Notice 2020-18.

1. It confirms that the relief applies to any type of taxpayer: individual, trust, estate, corporation or unincorporated business entity. The relief is automatic and does not require a showing that the taxpayer is sick, quarantined, or otherwise adversely impacted by COVID-19.
2. The relief only applies to feral income tax returns or payments due on April 15, 2020 and does not apply to federal income tax returns and payments due on any other date. For example a C corporation return due on May 15, 2020 is not covered by this relief and must be filed by that date with the related income taxes paid.
   
   However, the April 15, 2020 due date does not have to be the original due date for the taxpayer’s return. If a taxpayer’s 2019 tax return has an April 15, 2020 return as the result of an prior extension of time to file, the filing date of the return is extended to July 15, 2020.
3. The ninety day extension of time to file and pay taxes applies solely to income taxes, including self-employment tax. There is no extension or deferral of payment for other types of federal taxes – e.g., excise taxes, payroll taxes, for estate or gift taxes, or for information returns. The Notice provides a list of returns covered by the deferral rule.
4. The guidance notes that the June 15, 2020 second quarter estimate has not been deferred and may be due before the first quarter estimate, which under the relief provision can be deferred to July 15. This rule may change as a result of the Coronavirus bill pending in Congress.
5. If an affected taxpayer needs an extension of time for filing the 2019 income return beyond July 15, the guidance provides for this request to be made on July 15, 2020 on the appropriate extension request form (Form 4868 or Form 7004). The payment of the estimated amount of tax due should be made with the filing of the extension request.
6. The payment of the Section 965 transition tax has also been deferred until July 15, along with the BEAT payment and the filing of the related Form 8991.
7. The dates for certain tax-favored contributions has been extended:
   1. The due date for IRA payments can now be made for 2019 by July 15, 2020.
   2. The date for an employer to make a contribution to a qualified retirement plan that would be due on April 15 is also extended to July 15.
   3. Contributions to a Health Savings Account or Archer Medical Savings Accounts can be made on July 15.
8. The 10% premature distribution penalty tax for early withdrawals from certain qualified plans can be calculated, reported and paid at the same time as the income tax return on which the gross income is included and is therefore also deferred.
9. Since some taxpayers may have already filed their income tax returns with payment scheduled to be made by April 15, the guidance notes that this will not be automatically rescheduled by IRS to July 15. The taxpayer must take steps to cancel and reschedule the payment under the procedures listed by IRS in the Notice.

While it may not answer all questions raised by the rule deferring rules, several common ones have been covered. Marcum will be monitoring developments as they occur, including tax changes which may result from pending legislation.

If you have any questions, do not hesitate to contact your Marcum tax professional or contact Michael D’Addio at 203.781.9665 or email Michael.

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