Tax relief and related guidance are evolving just as quickly as the general news and guidelines surrounding the COVID-19 pandemic. The most recent IRS relief was issued with IRS Notice 2020-18 which supersedes the previous relief granted under Notice 2020-17. In conjunction with this notice, the IRS has issued FAQs surrounding the extension granted.
Who is Eligible for Relief?
This new relief recognizes the widespread impact of the COVID-19 emergency and, accordingly, expands the definition of affected taxpayers. Under Notice 2020-18, any person with a Federal income tax return or payment due on April 15, 2020, including fiscal year filers, is eligible for relief. This includes any type of taxpayer, including individuals, trusts, estates, corporations, partnerships, or other unincorporated business entities. The return or payment must be due on April 15, 2020 in order to qualify for automatic relief.
What Type of Relief is Available?
Income tax returns and payments that are normally due on April 15, 2020 are automatically extended until July 15, 2020. Penalties and interest will not begin to accrue until after July 15th for any amount unpaid by that date. The payment extension applies to both 2019 Federal income tax payments (including payments of tax on self-employment income) as well as first quarter 2020 estimated income tax payments (including payments of tax on self-employment income), regardless of the amount owed.
What Else is Included in This Relief?
- IRA contributions are automatically extended to July 15, 2020
- Contributions to an HSA or Archer MSA are automatically extended to July 15, 2020
- §965(h) installment payments are automatically extended to July 15, 2020
What is Excluded from This Relief?
- State income tax return and payments. Each state is responsible for issuing their own extension and the related rules and requirements for qualification.
- Estate tax returns
- Gift tax returns
- Amended returns for 2016 with refund claims (whose statute of limitations expires on April 15, 2020)
- Second quarter estimated tax payment (the due date for second quarter estimates will remain at June 15, 2020)
- Information returns
- Payroll taxes and related filings
- Excise taxes and related filings
If you qualify for relief there are no additional action items to take – the filing and payment extensions are automatic through July 15, 2020. Taxpayers that cannot file by July 15, 2020, will be required to request an extension at that time. Taxpayers expecting a refund are encouraged to file as soon as possible. Filing electronically with direct deposit is the quickest way to process refunds.
If your unsure of whether this relief will apply, please contact your WilkinGuttenplan tax advisor. For new developments or updated guidance check out our COVID-19 Resource Center.
