Coronavirus Tax Relief: COVID-19 Pandemic Leads to Wide Ranging Extensions of Time for Taxpayers, IRS

Apr 23, 2020   
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In light of the widespread disruption to American life caused by the COVID-19 pandemic, the IRS has promulgated a broad set of deadline extensions, which afford taxpayers substantial relief.  Additionally, under new IRS guidance, the government itself has additional time to take certain actions which may have lasting impacts on taxpayers currently involved in controversy matters with the IRS.  These extensions of time, summarized below, are set forth in IRS Notice 2020-23, which was released on April 9, 2020.

IRS Notice 2020-23 provides relief to taxpayers who face deadlines which would otherwise arise between April 1, 2020 and July 15, 2020.  Specifically, any taxpayer who must file or make payments with respect to certain forms between April 1 and July 15 is granted an automatic extension of time to July 15 to complete the filing or make the payment.  Among the primary forms Notice 2020-23 applies to (a full list is provided in the Notice) are:

  • IRS Form 1040 (annual return of individual taxpayers)
  • IRS Form 1120, 1120-F, and 1120-S (annual returns of subchapter C, subchapter S, and foreign corporations)
  • IRS Form 1065 (annual return of partnerships)
  • IRS Form 1041 (annual return of estates and trusts)
  • IRS Form 706 (estate and generation-skipping transfer return)
  • IRS Form 709 (gift and generation-skipping transfer return)
  • IRS Form 990-T or 990-PF (returns of exempt organizations, including those classified as private foundations)
  • IRS Form 1040-ES (return related to quarterly estimated tax payments)

Thus if a return was originally due April 15, the deadline has automatically been extended to July 15.  This extension applies to all schedules and attachments that typically must be filed with these forms as well, in addition to any elections that must typically be made on such forms.

In addition to providing relief with respect to form filing and payment deadlines, deadlines to file petitions with the Tax Court, a notice of appeal of a Tax Court decision, filing a claim for refund of tax, or filing a lawsuit seeking a refund of tax that would otherwise fall within April 1, 2020 and July 15, 2020 are also automatically extended to July 15.  For instance, if a taxpayer received an IRS notice of determination dated March 1, typically the Taxpayer would have 90 days—that is, until May 29, 2020—to file a petition to the Tax Court.  Under the Notice, that deadline is extended until July 15, 2020.

Additionally, all of this relief is automatic, meaning that neither the taxpayer nor his tax lawyer or accountant needs to file anything with the IRS to receive this relief. Additionally, the regular extension periods available to taxpayer are still available.  However, if a taxpayer seeks a regularly available extension, the relief provided by Notice 2020-23 does not serve to add additional time to the regularly extended deadline.  For instance, if a calendar year taxpayer files an extension application with respect to his or her 2019 1040 (which would extend the 1040 deadline from April 15, 2020 to October 15, 2020 in normal circumstances), no additional time is provided by reason of Notice 2020-23; the deadline to file the return would still be October 15, 2020.

In addition to providing taxpayers relief, Notice 2020-23 also provides additional time for the government (chiefly the IRS) to take certain actions. Specifically, with respect to any taxpayer (individual or entity) who is under IRS examination or whose case is before the IRS Office of Appeals, the Notice provides the government an additional 30 days to:

  • Assess any tax;
  • Give or make any notice or demand for the payment of any tax, or with respect to any liability to the United States in respect of any tax;
  • Collect, by levy or otherwise, the amount of any liability in respect of any tax;
  • Bring suit, by the United States, or any officer on its behalf, in respect of any liability in respect of any tax;
  • Allow a credit or refund of any tax; and
  • Take any other act specified in a revenue ruling, revenue procedure, notice, or other guidance published in the Internal Revenue Bulletin

The relief provided by IRS Notice 2020-23 is substantial and represents an acknowledgement by the IRS of the seriousness of the challenges posed by the COVID-19 pandemic.  As evidence of this acknowledgement, in normal circumstances extensions to file a return do not concomitantly provide an extension to pay the tax due; even if the deadline to file a return is extended, interest and penalties will accrue unless payment is made by the return’s original due date.  That is not the case under the Notice. Rather, the Notice essentially acts as a waiver by the IRS of three months of penalties and interest associated with an outstanding tax liability.

In addition to extending return filing deadlines, the Notice also carries the potential to substantially affect litigation of federal tax issues.  The Notice provides additional time to make decisions regarding whether to file a petition in Tax Court, whether to appeal a Tax Court decision, or whether to file a refund suit.  Conversely, the Notice also provides the IRS additional time to assess tax and make collection, in addition to other steps.  Consequently, Notice 2020-23 may substantially affect common taxpayer defenses, such as expiration of the applicable statute of limitations.

FIDJ serves as tax counsel for individuals, as well as a wide range of for profit and tax exempt entities. If you or your company are in need of tax counsel related to the Coronavirus or any other issues, feel free to contact us for a free initial consultation.