Income Tax Deadline Update: IRS Extends Filing Deadline for 90 Days Due to COVID-19

Two days after extending by 90 days the deadline for payment of certain federal income taxes, on March 20, US Secretary of the Treasury Steven Mnuchin announced that the Internal Revenue Service will also extend the deadline for filing federal income tax returns to July 15, 2020. The IRS confirmed Secretary Mnuchin’s announcement by releasing Notice 2020-18, which supersedes Notice 2020-17 (discussed in our March 19 LawFlash).

Notice 2020-18, which restates and expands upon the relief previously provided in Notice 2020-17, generally provides that the deadlines for both filing federal income tax returns and making certain required income tax payments are extended from April 15, 2020 to July 15, 2020. This extension is automatic, and taxpayers do not need to take action, such as file for an extension, to take advantage of this relief.

Importantly, the notice also removes the previously announced limitations on the amount of tax payments that may be deferred; now, taxpayers may defer until July 15, 2020, any amount of federal income tax payments. No interest, penalties, or additions to tax for failure to file federal income tax returns or pay federal income taxes will be accrued on the deferred filings or payments through July 15, 2020.

Updates Included in Notice 2020-18

Key updates include the following:

• NEW: Taxpayers now have until July 15, 2020 to file federal income tax returns relating to the 2019 tax year. This includes individuals, trusts, estates, partnerships, associations, and companies or corporations. This filing extension does not apply to federal information returns. Information returns generally include the reporting of certain payments on Forms 1098 and 1099, as well as annual exempt organization information returns on Form 990.
• NEW: The extension is automatic. Taxpayers do not need to request the extension by filing Forms 4868 or 7004, as they normally would. Presumably, taxpayers who wish to extend their filing deadline by the full six months traditionally available should file the appropriate extension form by July 15.
• UPDATED: The previously announced extension to make federal income tax payments (including tax on self-employment income) relating to the 2019 tax year, and estimated income tax for tax year 2020 (previously due April 15, 2020) has been expanded. Now there is no limitation on the amount of the payment that may be deferred to July 15, 2020. Notice 2020-17 previously capped the federal tax payment relief to $10 million for C corporations (or members of a consolidated group) and $1 million for individuals in the aggregate.

Notice Broadens Scope, But Does Not Represent Treasury’s Full Remedial Powers

Notice 2020-18 helpfully broadens the scope of Notice 2020-17, but the US Department of the Treasury still did not use the full extent of its remedial powers. Under 26 USC section 7508(a)(1), Treasury could have extended the deadlines for (1) the payment of estate, gift, employment, or excise tax, (2) the filing of estate, gift, employment, or excise tax returns; petitions with the US Tax Court; claims for credit or refund of any tax; or refund lawsuits, or (3) “[a]ny other act required or permitted under the internal revenue laws specified by” the Treasury Secretary.

Additionally, the notice does not address payments that would be due in the coming months for corporations with a fiscal year, nor does it address payments for the second quarter of 2020, which will be due on June 15 for corporations on a calendar year.

No Extension for Information Returns

Importantly, Notice 2020-18 provides “[n]o extension” for “any Federal information return.” Information returns include, among others, Form 1098, Form 1099, and health insurance reporting. Many of these forms are due later this month, on March 31, if filed electronically. A listing of these information returns can be found on the IRS website in its Guide to Information Returns. Additionally, Form 990 (Return of Organization Exempt from Income Tax), which is used to provide the IRS with information required by 26 USC section 6033, might also be considered an information return, for which the May 15 filing deadline (for calendar year exempt organizations) was not extended. 

There are many other common forms and statements that might be considered or are titled information returns. A few examples include Form 8938 (Statement of Specified Foreign Financial Assets), Form 5471 (Information Return of US Persons With Respect to Certain Foreign Corporations), and Form 5472 (Information Return of a 25% Foreign-Owned US Corporation or a Foreign Corporation Engaged in a US Trade or Business). These forms and statements are generally attached to and filed with taxpayers’ annual federal income tax returns. While it is unclear whether Notice 2020-18’s reference to “information returns” is intended to include these types of forms, presumably these would also be subject to the extended deadline of July 15, 2020.

State-Level Taxpayer Relief

At the state and local level, many jurisdictions are providing relief to taxpayers with upcoming tax payments that will be due. While several jurisdictions have come out in following the 90-day postponement guidance recently issued by the IRS, other jurisdictions are applying their own extensions for various tax filings. Morgan Lewis will be providing a matrix that summarizes the state and local tax relief relating to COVID-19. A link to the matrix will be posted on our Coronavirus COVID-19 resource page and will be updated on a regular basis to take into account the most recent changes.

Coronavirus COVID-19 Task Force

For our clients, we have formed a multidisciplinary Coronavirus COVID-19 Task Force to help guide you through the broad scope of legal issues brought on by this public health challenge. We also have launched a resource page to help keep you on top of developments as they unfold. If you would like to receive a daily digest of all new updates to the page, please subscribe now to receive our COVID-19 alerts.

CONTACTS

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following members of Morgan Lewis’s tax practice:

Washington, DC
Jennifer Breen
Sheri Dillon
Eric Albers-Fiedler

New York
Cosimo Zavaglia

Silicon Valley
Bart Bassett