Pension & Benefits News IRS FAQs clarify filing and payment extension to July 15 for plans due to COVID-19
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Wednesday, April 15, 2020

IRS FAQs clarify filing and payment extension to July 15 for plans due to COVID-19

By Pension and Benefits Editorial Staff

The IRS has released frequently asked questions FAQs on the extension of the due date for filing income tax returns and payments to July 15, 2020 provided in IRS Notice 2020-18, I.R.B. 2020-15, April 6, 2020. The FAQs clarify the due date for contributions to IRAs and workplace-based retirement plans, as well as other issues.

Eligibility for extension. The due date for filing Federal income tax returns and Federal income tax payments otherwise due on April 15, 2020, is extended to July 15, 2020, as a result of the ongoing Coronavirus (COVID-19) emergency. A taxpayer does not have to be sick, quarantined, or have any other impact from COVID-19 to qualify.

The relief applies only to income tax returns due on April 15, 2020, including a fiscal-year taxpayer. The relief does not apply to Federal income tax returns and payments due on any other date. Businesses and other entities that have filing due dates on May 15, June 15, or other dates have not been granted relief at this time. The filing and payment extension applies to forms, including:

  • Form 1040, 1040-SR, 1040-NR, 1040-NR-EZ, 1040-PR, 1040-SS (for individuals);
  • Form 1041, 1041-N, 1041-QFT (for estates and trusts); and
  • Form 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-SF (for corporations).

The due date for partnerships and S corporations whose returns were required to be filed on March 16, 2020, has not been postponed. Form 990-T used by tax-exempt organizations for business income is not required to be filed until July 15, 2020, but only if the form is due to be filed on April 15, 2020. There is no postponement if Form 990-T is due on May 15, 2020. The filing extension does not apply for filing payroll, excise, or any other information return even if the return is due on or before April 15, 2020.

Additional extensions. The extension of the filing and payment due date from April 15 to July 15 is automatic. Taxpayers do not need to file any form or call the IRS to receive the extension. Taxpayers that need more time to file their income tax returns after July 15, 2020 can request an additional extension using Form 4868 or Form 7004. Any additional extension must be requested by July 15, 2020 (it does not need to be made by April 15, 2020). If the taxpayer properly estimates 2019 tax liability using the information available to them and file for an extension by July 15, 2020, the tax return will be due on October 15, 2020 (and additional three months, not an additional six months).

Payment of taxes. The deadline for making Federal income tax payments is also extended to July 15, 2020, for payments otherwise due on April 15, 2020. This includes tax on self-employment income, estimated tax payments for the 2020 tax year, Code Sec. 965 installment payments, and estimated payments of the BEAT erosion tax.

Taxpayers have until July 15 to make the tax payments, even if they already filed their 2019 Federal income tax return that would have been due on April 15 but have not paid yet. Interest and penalties will not accrue until after July 15. Any tax payments that are already scheduled will not be automatically rescheduled. Taxpayer must actively cancel any scheduled payment through IRS Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or their financial institution if they authorize an electronic fund withdrawal.

Contributions to IRAs and workplace-based retirement plans. The extension of the filing deadline also extends the deadline for making contributions to individual retirement accounts (IRAs), as well as health savings accounts (HSAs) and Archer medical savings accounts (MSAs). Because the due date for filing Federal income tax returns is now July 15, 2020, taxpayers may make contributions to IRAs, HSAs, and Archer MSAs for 2019 at any time up to July 15, 2020.

Because the 10% additional tax on amounts includible in gross income from distributions taken from IRAs or workplace-based retirement plans in 2019 is calculated, reported, and paid at the same time as the income tax owed on the amounts includible in gross income on the distribution, the reporting and payment of the 10% additional tax also has been extended to July 15, 2020 as a result of this relief.

Because employers with a Federal income tax return due date of April 15, 2020 are Affected Taxpayers under Notice 2020-18, the end of the grace period for these employers for making contributions to their workplace-based retirement plans under Code Sec. 404(a)(6) is also extended from April 15, 2020 to July 15, 2020 under this relief. So, for example, if an employer is a corporation with an April 15, 2020 due date for filing the Form 1120, then the grace period under Code Sec. 404(a)(6) for the employer to make contributions to its workplace-based retirement plan that are treated as made on account of 2019 ends on July 15, 2020.

However, excess deferrals to qualified retirement plan must still be withdrawn (including income) by the April 15, 2020, due date.

Source: IRS Filing and Payment Deadlines Questions and Answers.

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