Article Highlights:
- Filing Due Date Postponement
- Payment Due Date Postponement
- Extensions
- Late Filing and Late Payment Penalties
- Required Minimum Distributions
- 2019 IRA Contributions
- Distributions of Excess Retirement Plan Contributions
- 2019 HSA & Archer MSA Contributions
- Elections
- Cancelling Direct Withdrawals
- Estimated Tax Payments
- Underpayment Penalties
- Payroll Reporting
On April 9, 2020, the IRS issued Notice 2020-23. Notice 2020-23 has expanded the postponement of filing and payment obligations. It now includes those due on or after 1.4.2020 and before 15.7.2020. This notice expands on Notices 2020-18 and 2020-20.
Postponement of Filing and Payment Obligations:
Filing Due Date Postponement
All returns and payments due during the period April 1- July 15, 2020 are postponed and due on July 15, 2020. This includes:
- Individual 1040 tax returns
- 2016 1040 Series returns – the statute for refunds
- Corporation Returns (1120 series, including 1120-S)
- Association returns (Forms1120-C and 1120-H)
- Partnership Returns (Form 1065)
- Estate and trust income tax returns (1041 series)
- Estimated Tax Payments (1040-ES, 1041-ES, 1120-W)
- Estate and generation-skipping transfer tax returns (706 series)
- Gift and generation-skipping transfer tax returns (709 series)
- Exempt Organization returns (990-T)
- Excise Tax Payment Filings (990-PF and 4720)
- Net investment income tax (8960)
- Tax on Base Erosion Payments of Taxpayers with Substantial Gross Receipts (8991)
- REMIC (1065)
- Info Regarding Beneficiaries Acquiring Property from a Decedent (8971)
- Estate tax payments (principal or interest) due as a result of extensions of time to pay estate taxes under Sections 6161, 6163, or 6166, and annual certification requirements under Sec 6166
Automatically, the due date for these returns is July 15, 2020, and there is no need to file an extension. Additionally, interest and penalties will be disregarded for the postponement period.
CAUTION: This postponement does not include FBAR filings. However, FBARs have an automatic extension to October 15. The automatic extension effectively makes October 15, 2020 the FBAR due date.
Payment Due Date Postponement
- Postpoment includes any payments that would have been due April 1, 2020 and before July 15, 2020. This includes self-employment tax.
- There is no limit on the amount of the payment regarding the postponement. In contrast, previous guidance in Notice 2020-17 included limits. However, Notice 2020-18 supersedes that notice and there are no limits.
- A Section 965 installment payment due on April 15, is now due on July 15, 2020. Plus, it is associated with a 2019 tax return that is now due on July 15, 2020. (Reference IRS COVID-19 Webpage Q&A #8)
- Additionally, the payment postponement applies to any retirement plan or IRA early withdrawal penalties incurred in 2019. (Reference IRS COVID-19 Webpage Q&A #18)
Additional Guidance for Postponement of Filing and Payment Obligations
Extensions
Affected taxpayers do not have to file Forms 4868, 8892 or 7004 to extend to the July 15 due date. If you require more time after that, one can use the 4868, 8892 or 7004 extensions to the due date until October 15, 2020. You must file the request by July 15, 2020. To avoid interest and penalties, the anticipated tax due must be paid with the extension request. (Reference IRS COVID-19 Webpage Q&A #12)
Late Filing and Late Payment Penalties
Importantly, no late filing or late payment penalties will apply during the 3-month filing and payment postponement period. Unless further relief is provided, these penalties will resume after July 15, 2020.
Required Minimum Distributions
RMDs are put off for 2020.
2019 IRA Contributions
Normally, the last day to make an IRA contribution for 2019 is the unextended due date of the 2019 tax return. However, since the extension to July 15, 2020, the IRA contribution extends the deadline as well. (Reference IRS COVID-19 Webpage Q&A #17)
Distributions of Excess Retirement Plan Contributions
Postponement will not include in income excess elective deferrals of retirement plans in 2019, if withdrawn by April 15, 2020. The deadline remains the same. (Reference IRS COVID-19 Webpage Q&A #19)
2019 HSA & Archer MSA Contributions
Likewise, the due date for 2019 HSAs and Archer MSA contribution extends to July 15, 2020. (Reference IRS COVID-19 Webpage Q&A #21)
Elections
Elections that are made or required to be made on a timely filed specified form (or attachment to a specified form) will be considered to have been made timely if the specified form or attachment is filed by 15.7.2020. (Notice 2020-23)
Cancelling Direct Withdrawals
If you have already filed a return that included direct withdrawals for the tax payment, the withdrawal date has not yet passed, you can cancel the withdrawal by calling the IRS e-file. Contact IRS e-file Payment Services 24/7 at 1-888-353-4537. But wait 7-10 days after the acceptance of the return before calling. Cancellation requests must be received no later than 11:59 p.m. ET two business days before the scheduled payment date.
CAUTION: Due to circumstances where taxpayers are not able to contact e-file payment services by phone, the IRS is recommending taxpayers put a stop payment on the check at their bank.
- New Scheduled Payment – You will need to make a new automatic withdrawal or send a check for payment until July 15. If sending a check, it is wise to obtain a proof of mailing from the P.O. or mail the check a couple weeks ahead of July 15. Moreover, one should accompany a check by a filled-out Form 1040-V, Payment Voucher.
Estimated Tax Payments – (Reference IRS COVID-19 Webpage Q&A #16)
- April 15 Estimate – Notice 2020-23 extended the due date to July 15, 2020.
- June 15 Estimate – Notice 2020-23 extended the due date and is also July 15, 2020.
You can continue to make estimated tax payments in the usual manner according to the usual schedule.
Underpayment Penalties
On the other hand, there is no relief from the penalty for underpayment of 2019 taxes. The only relief is via Form 2210 for individuals and Form 2220 for corporations. (Reference IRS COVID-19 Webpage Q&A #24)
Payroll Reporting
In conclusion, payroll reporting must continue. However, the employer can defer certain portions of the deposit (Act Sec 2301). Certain payroll deposits can be retained by the employer to refund the employer for sick and family. Payroll deposits can also be used for leave payments and the employee retention credit.
If you have any questions about this information, please contact us.
