The IRS released Notice 2020-23 on April 9, 2020 augmenting previously announced relief from filing and payment deadlines. This notice provides much-needed clarity on some key matters resulting from the ongoing impact of the coronavirus pandemic on taxpayers and their advisors not directly addressed in prior notices.
- Most federal tax returns, excluding payroll, and related payments that were originally due on or after April 1, 2020 but prior to July 15, 2020 are now due on July 15, 2020.
- Previous guidance only addressed filings and payments due April 15, 2020, and now filings and payments due on May 15, 2020 and June 15, 2020 are eligible for the same relief.
- The deadline postponement to July 15th now specifically includes all information returns including Forms 5471, 5472, 8858, 8865 and 8938 that are filed as part of U.S. federal income tax returns.
- Filing extensions made prior to July 15th will extend the due dates of filings to their regular extended due date.
- U.S. personal tax returns including Forms 1040 and 1040NR will have an extended deadline of October 15th for both April 15th and June 15th deadlines.
- U.S. corporate tax returns including Forms 1120 and 1120-F will have an extended due date for April 15th of October 15th, the extended due date for May 15th will be November 15th, and the extended due date for June 15th will be December 15th.
- The relief applies to a wide variety of taxpayers including individuals, trusts, estates, corporations, partnerships, and exempt organizations. The relief includes the following:
- tax returns including original returns, amended returns, or late returns filed to claim refunds;
- tax payments including payments on filing and estimated tax payments;
- information returns even when required to be filed separate from income tax return;
- certain appeals deadlines.
- This relief does not apply for U.S. payroll filings and related payments.
Notice 2020-23 makes the filing of protective extensions unnecessary for individual and corporate taxpayers that file Forms 5471 and/or 5472 prior to July 15. Prior to the release of this latest guidance, many taxpayers filed extensions in order to protect themselves from penalty exposure, as the late filing of many information returns can give rise to penalties of US$10,000 or more. These taxpayers will need to pay any outstanding tax by July 15 and can file returns at any time before the extended due dates.
Although many filing deadlines were postponed, the IRS will continue to process tax returns and issue refunds to taxpayers, as well as process Economic Impact Payments for individuals under the newly enacted CARES Act. In a news release issued on April 9, the IRS encouraged taxpayers to file their returns electronically where possible, as the processing of paper-filed returns will be delayed due to the full or partial shutdown of certain internal functions at the IRS.
State tax authorities have the latitude to determine whether or not they will provide relief from filing and payment deadlines analogous to the federal relief now available, and additional or updated guidance should be expected in the near future from these authorities. Taxpayers should not assume that the states will provide relief analogous to federal deadlines, and should consider the need to file extensions and make tax payments prior to July 15.
Many taxpayers will have returns and related payments due on July 15th as a result of these relief measures. Taxpayers should coordinate closely with their tax return preparers as the typical calendar of U.S. tax return preparation has changed significantly because of the coronavirus pandemic.
If you have questions regarding the U.S Tax filing and payment deadlines, please contact BDO Canada’s U.S. Tax team:
Dan Lundenberg, Partner, U.S Tax Practice Leader (Toronto)
John McCrudden, Partner, U.S. Corporate Tax (Toronto)
Gil Lederhos, Partner, U.S. Corporate Tax (Calgary)
Brent Hoshizaki, Partner, U.S. Corporate Tax (Vancouver)
Jason Ubeika, Partner, U.S Personal Tax (Toronto)
Lori Lui, Partner, U.S. Personal Tax (Vancouver)
The information in this publication is current as of April 13, 2020.This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.