IRS Opens the Floodgates on Tax Deadline Relief
After weeks of offering piecemeal relief on tax return filing deadlines and tax payment due dates, the IRS announced that hundreds of tax deadlines have now been pushed to July 15.
The new, expansive relief in Notice 2020-23, 2020-18 IRB 1, comes after a wide array of taxpayer groups had for weeks urged the IRS and Treasury to provide across-the-board tax deadline relief. Earlier IRS notices had mostly limited the pandemic-related deadline relief to tax actions with an April 15 due date, which were postponed to July 15. That relief now generally applies to all taxpayers with a tax return filing deadline or payment due date between April 1 and July 15.
“This means that anyone, including Americans who live and work abroad, can now wait until July 15 to file their 2019 federal income tax return and pay any tax due,” the IRS said in an April 9 release.
The notice also extends relief to taxpayers who need to take time-sensitive actions as defined under reg. section 301.7508A-1(c)(1)(iv) – (vi). It extends any due dates for those actions that would have fallen between April 1 and July 15 to the latter date.
The notice explicitly points out that this relief includes the due dates for filing petitions in the Tax Court. IRS Chief Counsel Michael Desmond mentioned in March that the IRS was considering using its section 7508A authority to grant taxpayers relief from Tax Court petition deadlines.
The relief also includes taxpayer claims for refunds and the time limits on filing court cases to adjudicate denials of those claims. However, the notice makes clear that any deadlines that expired before April 1 aren’t covered and therefore remain expired.
Hip, Hip, Hooray
The new swath of extensions was welcomed by tax professionals, many of whom had been unsatisfied with the IRS's piecemeal approach to relief.
Joe Kristan of Eide Bailly LLP said the IRS has “mostly cleaned up my wish list,” particularly by pushing back the due date for second-quarter estimated tax payments, providing more relief for fiscal-year entities, and specifying that the extension to July 15 applies to attachments, like Form 5471 filings, not just forms. “This has worried some practitioners,” Kristan told Tax Notes.
Kristan said he was surprised by the “sweeping language” in the notice that applied relief to “all specified time-sensitive actions.” That seems to suggest that any taxpayer with a refund claim statute of limitations that would have expired now has until July 15 to file a claim, he said.
Glen Birnbaum of Heinold Banwart Ltd. likewise highlighted the clarification around the second-quarter estimated payments as particularly helpful. His firm’s software had just been updated to reflect the earlier change, and it was “very bizarre to see first quarter due July 15 and second quarter due June 15,” he said.
Overall, the IRS’s relief seems to cover “everything under the sun,” Birnbaum said.
Nonprofits, whose Forms 990 are due May 15, had been left out of the relief, but their deadline also has been pushed back to July 15.
Tim Delaney, president and CEO of the National Council of Nonprofits, said the deadline shift allows charities to focus their efforts on “things that truly matter right now,” like providing medical assistance to those in need or helping healthcare workers.
“This is not a time to complain: ‘What took IRS so long?’ It’s a time to acknowledge that reason prevailed and that nonprofits need to be 100 percent focused on addressing critical needs rather than tending to paperwork,” Delaney said.
Shamik Trivedi of Grant Thornton LLP called the notice “the guidance taxpayers and tax professionals have been waiting for,” and said it reflects the IRS exercising its full authority under section 7508A and Rev. Proc. 2018-58, 2018-50 IRB 990, to postpone all these tax actions.
Trivedi highlighted the extension for filing Form 4466, “Corporation Application for Quick Refund of Overpayment of Estimated Tax,” as particularly helpful for taxpayers. That form had not been covered under the IRS’s prior relief, and the extension will be a relief to “a lot of taxpayers who were under the gun to get these things filed,” he said.
The extensions will also ease the pressure on the IRS, which has had to shutter its service centers.
Jennifer Breen of Morgan, Lewis & Bockius LLP also praised the IRS’s expansive and long-awaited relief. “From fiscal year corporate taxpayers who were hoping to have payment and filing deadlines extended to economically disadvantaged individual taxpayers who are unable to obtain assistance in filing petitions with the United States Tax Court, this relief will benefit a wide range of taxpayers,” she told Tax Notes.
Barry Melancon, president and CEO of the American Institute of CPAs, similarly deemed the new notice “great news to the thousands of taxpayers and tax professionals who are faced with upcoming deadlines.”
Even still, Melancon urged the IRS and Treasury to develop a contingency plan for another phase of tax relief, if it turns out to be needed.
“As a country, we should not risk anyone’s life to meet tax filing obligations,” Melancon said in a statement.
Nathan J. Richman contributed to this article.
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