Tax Update: Special Edition Covid-19 Tax Relief – Cristina Bucksbaum, Senior Tax Manager

Small business Tax

Trying to stay on top of all the changes to tax law regarding the impact of the COVID-19 has become a daunting task. Those of us on the front lines of this effort to keep you all up to date and in the loop are dedicated to keeping you informed.

The focus of this update will be the most recent compliance clarifications on affected taxpayers, due dates, quick refunds, payroll and retirement. Please keep in mind that further clarifications and changes from the Treasury will be forthcoming on a continual basis during the COVID-19 pandemic.

Taxpayers Affected by Covid-19 Emergency

Notice 2020-23, amplifying Notice 2020-18, superseding Notice 2020-17

The IRS postponed to July 15, 2020 the due date for filing obligations and tax payment obligations as well as time-sensitive actions of “affected taxpayers” due on or after April 1, 2020 and before July 15, 2020. Affected taxpayers’ filing and payment obligations include:

  • Individual income tax payments and return filings on Forms 1040, 1040-SR, 1040- NR, 1040-NR-EZ, 1040-PR, and 1040-SS;
  • Corporate income tax payments and return filings on Forms 1120, 1120-C and 1120-S.
  • Partnership return filings on Forms 1065 and 1066;
  • Exempt organization business income tax and other payments and return filings on Form 990-T;
  • Excise tax payments on investment income and return filings on Form 990-PF and excise tax payments and return filings on Form 4720; and
  • Quarterly estimated income tax payments calculated on or submitted with Forms 990-W, 1040-ES, 1040-ES (NR), 1040-ES (PR), 1041-ES, and 1120-W.

Due Dates for Filling Tax Returns and Making Income Tax Payments

Notice 2020-23, amplifying Notice 2020-18, superseding Notice 2020-17

The IRS postponed to July 15, 2020 the due date for filing obligations and tax payment obligations of “affected taxpayers” due on or after April 1, 2020 and before July 15, 2020. The postponement is automatic; no Form 4868 or Form 7004 is required. Affected taxpayers may file extensions by July 15, 2020 for additional time to file returns, but the extension date may not go beyond the original statutory or regulatory extension date.

The postponed filing deadlines apply to forms listed above and to schedules, returns, and other forms filed as attachments thereto.

The period from April 1, 2020 to July 15, 2020 will be disregarded in the calculation of interest, penalty, or addition to tax for failure to file the returns or pay the taxes so postponed.

Quick Refunds

Notice 2020-26

A corporation that overpays its estimated tax can obtain a quick refund of the excess estimated tax before it files its tax return. A corporation can obtain a quick refund only if the amount of the refund equals or exceeds 10% of the amount estimated by the corporation on its application as its income tax liability for the tax year and is at least $500.

The time to file a tentative carryback adjustment application, Form 1139, for a tax year that began during calendar year 2018 and ended before March 27, 2019 had already expired by the time the CARES Act was enacted on March 27, 2020. The IRS thus granted, in Notice 2020-26, a six-month extension of time to file a tentative carryback adjustment application for taxpayers with NOLs arising in a tax year that began during calendar year 2018 and ended on or before June 30, 2019. The extension does not extend the time to carry back any other item.

The IRS also provided, in Rev. Proc. 2020-24, relief for taxpayers with tax years that began before January 1, 2018 and ended after December 31, 2017. A taxpayer with an NOL arising in such a year will be treated as having timely filed a tentative carryback adjustment application, Form 1139, and any available elections for such taxable years with an NOL (i.e., waiver or reduction of any carryback period, revocation of waiver of any carryback period) if filed by July 27, 2020.

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