Washington, D.C. (March 27, 2020) – The American Institute of CPAs (AICPA) is urging the Department of the Treasury and the Internal Revenue Service (IRS) to provide broader tax filing and payment relief for taxpayers affected by the ongoing coronavirus (COVID-19) pandemic in a letter released today.
IRS Notice 2020-18 and the accompanying frequently asked questions (FAQs) allows taxpayers to delay tax filing and payments for 90 days and provides interest and penalty relief for federal income tax returns and payments traditionally due April 15th. Yet, it is not possible for many taxpayers and tax preparers to calculate all payments and prepare and file various returns because of the uncertainty and severe challenges caused by the spread of the Coronavirus pandemic.
The AICPA is urging Treasury and the IRS to broaden the scope of Notice 2020-18 and is requesting that all federal income tax, information returns and payments (e.g., installments and estimated payments) originally due between March 3, 2020 and July 15, 2020 be granted additional time to file and pay until July 15, 2020. The AICPA is also requesting further guidance and clarification regarding the Notice.
The AICPA submitted several priority questions and recommendations for consideration as Treasury and the IRS continue to provide guidance to taxpayers, including:
U.S. citizens living abroad and non-resident alien filers are potentially affected by the April 15 due date and payment requirement. Assure these taxpayers are eligible for relief to file by July 15.
Provide relief from manual signature requirements. For electronic transactions, IRS guidance requires a manual signature on Form 8868, IRS e-file Signature Authorization for Form 4868 or Form 2350, Form 8878-A, IRS e-file Electronic Funds Withdrawal Authorization for Form 7004, and Form 8879, IRS e-file Signature Authorization.
Clarify whether Form 990, Return of Organization Exempt From Income Tax, and Form 990-PF, Return of Private Foundation, with April 15 due dates are extended under Notice 2020-18. Forms 990 and 990-PF are referred to as “information returns” by the IRS and the tax due with Form 990-PF on net investment income is defined as an “excise tax.” If these returns are not included under Notice 2020-18, please provide filing and payment relief.
Provide filing relief to gift and estate tax returns that normally require paper submission and manual signatures. If an individual return is automatically delayed to July 15, the related gift tax return should similarly receive an automatic extension without having to file a Form 8892, Application for Automatic Extension of Time To File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax.
Provide relief from the normal statute of limitations during the pandemic and the 90-day period for a Notice of Deficiency if a locality has a shelter-in-place order.
Confirm that returns that are normally extended and filed with Form 1040, U.S. Individual Income Tax Return, Form 1120, U.S. Corporation Income Tax Return, and Form 1041, U.S. Income Tax Return for Estates and Trusts, are also automatically extended to July 15. (For example, these forms include Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts (paper filed separately); Form 5471, Information Return of U.S. Persons With Respect To Certain Foreign Corporations; Form 5472, Information Return of a 25% Foreign-Owned U.S. Corporation or a Foreign Corporation Engaged in a U.S. Trade or Business, Form 8621, Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, Form 8858; Information Return of U.S. Persons With Respect to Foreign Disregarded Entities (FDEs) and Foreign Branches (FBs); Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships; and Form 8938, Statement of Specified Foreign Financial Assets.)
Provide guidance and filing relief for non-resident alien taxpayers who cannot leave the U.S. and will trigger the substantial presence test due to the impacts of COVID-19.
8. Confirm that an extension overpayment made on July 15 counts as if were made for Q1 (i.e., April 15). Please confirm that this payment counts towards any required Q2 estimated tax payments.
9. Provide relief for S corporations that must make estimated payments on April 15 (e.g., the section 1374 tax imposed on certain built-in gains).
10. Provide payment relief to employers currently assessed penalties under the Affordable Care Act as part of the Employer Mandate under sections 4980H(a) and 4980H(b), including failure to file Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns, and Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, timely with the IRS and provide statements to participants under sections 6721 and 6722.
Veronica L. Vera