By: Samantha Levokove, Linda Galler and William L. Bricker, Jr.
In the wake of the novel coronavirus (COVID-19) pandemic, the IRS has issued guidance granting relief to taxpayers. As discussed below, these relief measures have extended filing and payment deadlines for many taxpayers.
Extensions to Tax Return Filing and Payment Deadlines – Individuals, Corporations and Trust Return Deadlines Extended, Partnerships and Information Returns Not Extended
According to IRS Notice 2020-18 (“Notice”) and related FAQs, taxpayers with a federal income tax return or payment due on April 15, 2020 are automatically granted extensions to July 15, 2020 for both filing federal income tax returns and making federal income tax payments. Taxpayers do not need to specifically request an extension. Those needing additional time to file beyond the July 15 deadline can request an extension by filing the appropriate forms (e.g., Form 4868, Form 7004).
Filing extensions apply only to the following types of tax returns and forms: Forms 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; Form 8991; and Form 990-T (but only if that form is due to be filed on April 15). The extension does not apply to partnership returns and other returns whose filing deadlines have already passed, e.g., Form 1065, Form 1065-B, Form 1066, and Form 1120-S for calendar year taxpayers, or filing estate and gift tax returns.
The Notice provides no extensions for filing information returns. This means that deadlines for penalty-sensitive foreign information return forms, such as Form 3520 and Form 3520-A, remained unchanged. It is unclear whether information returns that are generally attached to and filed with annual federal income tax returns, e.g., Forms 8938, 5471 and 5472, are covered by the Notice. Although FBARs (FINCen Form 114) are not covered by the Notice, pre-existing guidance provides for an automatic filing extension to October 15 when a taxpayer is unable to file by April 15.
Federal tax payments covered by the extension include income tax that normally would be due by April 15 as well as estimated tax payments (including payments of tax on self-employment income). The period between April 15, 2020 and July 15, 2020 will be disregarded in calculating interest and penalties for late filing and late payment. The Notice does not provide for extensions to pay payroll, excise, estate or gift taxes.
Second quarter 2020 estimated income tax payments are still due on June 15, 2020 resulting in the second quarter estimated taxes being due before the first quarter. This and the fact that taxpayers may incur losses due to Covid-19 places increased emphasis on estimated tax planning including possibly using the actual (annualized) as opposed to the safe method.
While the extensions provided for in the Notice do not directly apply to state and local tax filing and payment obligations, many states (e.g., New York and California) have announced parallel extensions and other states are expected to do so shortly. (Taxpayers are cautioned not to assume that state extensions apply and should check with a tax professional or the relevant state’s website.)
IRA Contributions
Contributions to an IRA can generally be made at any time during a particular year or by the due date for filing a federal income tax return for that year. Because the due date for filing federal income tax returns has been extended to July 15, 2020, individuals may make contributions to IRAs for 2019 until July 15, 2020. Similarly, contributions may be made to HSAs and Archer MSAs through July 15, 2020.
IRC 965(h) Payments Extended
In general, Section[1] 965 of the Code requires United States shareholders, as defined under Section 951(b), to pay a transition tax on the untaxed foreign earnings of certain specified foreign corporations as if those earnings had been repatriated to the United States. In accordance with Section 965(h), many taxpayers elected in prior years to pay the transition tax in installments over an eight-year period. For taxpayers whose 2019 federal income tax return due date has been automatically extended from April 15, 2020 to July 15, 2020, the due date for the Section 965(h) installment payment associated with that return has also been extended to July 15, 2020.
FATCA Report
Reporting Model 2 FFIs[2] and Participating FFIs are generally required to file Form 8966 (FATCA Report) annually by March 31st. This filing deadline has been extended to July 15, 2020.[3]
[1] All “Section” references are to provisions of the United States Internal Revenue Code of 1986, as amended (the “Code”).
[2] “Reporting Model 2 FFI” means an FFI or branch of an FFI treated as a reporting financial institution under an applicable Model 2 IGA and that has registered with the IRS and obtained a GIIN. A “FFI” is a foreign financial institution. A “GIIN” is a Global Intermediary Identification Number.
[3] Internal Revenue Service, FATCA – FAQs General, https://www.irs.gov/businesses/corporations/frequently-asked-questions-faqs-fatca-compliance-legal#reporting
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