Overview
For additional guidance, please refer to Steptoe's COVID-19 Resource Center.
Today, the Internal Revenue Service (IRS) issued answers to frequently asked questions related to the special federal income tax return filing and payment extension until July 15, 2020 provided in Notice 2020-18 for the COVID-19 emergency. In addition, on March 20, the Treasury Department, IRS, and Department of Labor (DOL) announced in IR-2020-57 a plan to implement the Families First Coronavirus Response Act's provisions on coronavirus-related paid leave for workers and tax credits for small and midsize businesses.
Steptoe's summary of the Families First Coronavirus Response Act can be found here.
FAQs on Tax Filing and Payment Extensions
The FAQs narrowly construe Notice 2020-18, sticking closely to the April 15 date, but they do address a few important questions that taxpayers have raised.
The FAQs clarify that eligibility for the relief in Notice 2020-18 is available for any person or entity with a federal income tax return or payment due April 15, 2020. The relief applies to fiscal year taxpayers who have returns due on April 15, whether that is the original due date or the due date on extension. Taxpayers do not need to be sick, quarantined, or have other impacts from COVID-19 to qualify for the relief.
The FAQs clarify that Notice 2020-18 postpones the filing and payment of the following federal income taxes and forms until July 15, 2020:
- Form 1040, 1040-SR, 1040-NR, 1040-NR-EZ, 1040-PR, 1040-SS
- Form 1041, 1041-N, 1041-QFT
- Form 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-SF
- Form 8960, Net Investment Income Tax—Individuals, Estates, and Trusts
- Form 8991, Tax on Base Erosion Payments of Taxpayers With Substantial Gross Receipts
- Section 965 installment payments
- First quarter estimated tax payments
However, the due dates for Forms 990-T otherwise due on May 15, and returns that were due on March 16, 2020 (including Forms 1065, 1065-B, 1066, and 1120-S for calendar year taxpayers) have not been postponed. In addition, second quarter estimated taxes are still due on June 15, 2020.
The relief applies only to income taxes and does not apply to excise, payroll, estate, or gift taxes. It also does not apply to the filing of information returns.
Taxpayers seeking to use the extended deadline of July 15 do not need to do anything and do not need to file a form requesting an extension. If a taxpayer needs additional time beyond July 15 to file its return, it can request an extension using Form 4868 for individuals or Form 7004 for businesses. The extension of time to file and pay does not apply to state income tax returns and taxpayers should check with their state, which may have a deadline different from July 15.
The FAQs also address some important questions related to retirement and health plans. The FAQs provide that the extended deadline of July 15 applies as an extension for both the deadline to contribute to an IRA and for an employer to make contributions to qualified retirement plans for 2019. The deadline for contributions to a Health Savings Account (HSA) or Archer Medical Savings Accounts (MSA) for 2019 are also extended to July 15.
Families First Coronavirus Act
IR-2020-57 states that to take immediate advantage of the paid leave credits, eligible employers who pay qualifying sick or child care leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and child care leave that they paid, rather than deposit them with the IRS. If those amounts are not sufficient to cover the cost of paid leave, employers can seek an expedited advance from the IRS by submitting a streamlined claim form that will be released next week.
The DOL announced that it will be issuing a temporary non-enforcement policy that provides a 30-day period for employers to come into compliance with the act. During the period, the DOL will not bring any enforcement actions as long as the employer has acted reasonably and in good faith to comply with the act.
