On April 9, 2020, the IRS and Treasury Department issued Notice 2020-23, granting an automatic extension of returns and quarterly tax payments, until July 15, 2020, to comply with several federal filing and payment obligations in addition to those already extended, as well as time to perform certain time-sensitive actions. The relief generally applies to all obligations that otherwise would have been due on or after April 1, 2020, and before July 15,2020.
1031 Exchanges and Opportunity Zones Investments
The IRS-issued guidance grants deadline relief for both 1031 like-kind exchanges and opportunity zone investments that are already underway. Both of these programs are designed to promote economic growth in communities.
- 1031 Like-kind Exchanges: If an investor has taken the first step of a like-kind exchange by selling the old property, and either the 45-day or the 180-day deadline falls between April 1 and July 15, the deadline has been extended to July 15.
- Opportunity Zones: If an investor who sold a capital asset planned to roll over the gain into an Opportunity Fund and the 180-day deadline to do so falls between April 1 and July 15, 2020, he or she can make the investment as late as July 15.
The notice clarifies “all schedules, returns, and other forms” that must be attached to the returns that are automatically extended are covered (such as Schedules H and SE, and Forms 3520, 5471, 5472, 8621, 8858, 8865 and 8938). This relief includes any installment payments of repatriation tax liabilities due on or after April 1, 2020, and before July 15, 2020. In addition, elections that are made or required to be made on a timely filed covered return are extended as well.
This relief is automatic: affected taxpayers do not have to call the IRS, file extension forms, or send letters or other documents to receive this extension. Taxpayers may continue to file for additional extensions beyond July 15, 2020, but the extension date may not go beyond the original statutory or regulatory extension date. For example, a request for an extension to file an individual tax return may be filed by July 15, 2020, to extend the time to file the return, but that extension will only be to Oct. 15, 2020. It will not extend the time to pay federal income tax beyond July 15, 2020.
Caution: This relief applies to federal obligations only. Each state will have its own deadlines.
Tax returns and payments covered by the notice include, but are not limited to:
- Individual income tax payments and filings on Forms 1040, 1040-SR and 1040-NR,
- Calendar- or fiscal-year corporate income tax payments and filings on Form 1120, 1120-S, 1120-C, 1120-F, 1120-RIC and 1120-REIT,
- Calendar- or fiscal-year partnership return filings on Form 1065,
- Estate and trust income tax payments and return filings on Form 1041,
- Estate and generation-skipping transfer tax payments and return filings on Form 706,
- Gift and generation-skipping transfer tax payments and return filings on Form 709,
- Exempt organization business income tax and other payments and return filings on Form 990-T, and
- Excise tax payments on investment income and return filings on Form 990-PF.
Time-sensitive taxpayer actions extended include:
- The 180-day period for investing eligible capital gains in a qualified opportunity zone,
- Filing a petition with the Tax Court, or for review of a decision rendered by the Tax Court,
- Filing a claim for credit or refund of any tax, and
- Bringing suit upon a claim or refund of any tax.
This relief is limited to the items specifically provided for by the notice and other official guidance released to date. Any other type of federal tax, return or time-sensitive act has not been extended. For example, Form 8752, where fiscal-year partnerships and S corporations make deferral period deposits, is not covered by the notice since it is not an income tax. It is also not filed as an attachment to or by the due date of any of the above-mentioned forms.
Notice: The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.