Notice 2020-18 (March 20, 2020) supersedes Notice 2020-17 (March 18, 2020); IRS Releases Filing and Payment Deadlines Questions and Answers (March 24, 2020).

On March 20, 2020 The United States Department of the Treasury released Notice 2020-18[1] which provided additional tax relief to taxpayers affected by the COVID-19 emergency.[2] Notice 2020-18 restated and expanded the relief provided by Notice 2020-17.[3] The notice supersedes Notice 2020-17.[4] On March 24, 2020, IRS released Filing and Payment Deadlines Questions and Answers on its website interpreting the notice.[5] The Treasury Department and the IRS continue to consider additional guidance on the issues addressed in the FAQ.[6]

Any person with a federal income tax payment or a federal income tax return due April 15, 2020, is an “Affected Taxpayer”. A “person” is “construed to mean and include an individual, a trust, estate, partnership, association, company, or corporation”.[7]

For Affected Taxpayers, the due date for filing federal income tax returns and for making federal income tax payments that would have been due April 15, 2020, is postponed to July 15, 2020.

  • There is no limit on the amount of tax that can be postponed until July 15, 2020.[8]
  • There is no need to request an extension to file returns subject to the notice.[9]

Only the following tax payments and tax returns[10] are eligible for this automatic extension:

  • federal income tax payments (including payments of tax on self-employment income) and federal income tax returns due on April 15, 2020, in respect of an Affected Taxpayer’s 2019 tax year, and
  • federal estimated income tax payments (including payments of tax on self-employment income) due on April 15, 2020, for an Affected Taxpayer’s 2020 tax year.

No extension is provided for the payment or deposit of any other type of federal tax or the filing of any federal information return.

  • Gift tax on gifts made in 2019 and gift tax returns with respect to gifts made in 2019 (even if no tax is due) must be filed by their regular due date of April 15, 2020.[11]
  • The notice does not postpone the payment of estimated income tax[12] due June 15, 2020, with respect to a taxpayer’s 2020 tax year.

Interest, penalties, and additions to tax for failure to file federal income tax returns and to pay federal income tax postponed by the notice will begin to run on July 16, 2020.

A number of other important dates are tied to the due date for filing an individual’s federal income tax return.

The IRS has interpreted the notice to postpone a number of these dates to July 15, 2020:

  • An individual may make contributions to an IRA for the 2019 tax year up to the date such individual's 2020 federal income tax return is due (without extension).[13] The deadline for making contributions to an IRA for 2019 is extended to July 15, 2020.[14]
  • An individual may make contributions to a health savings account (HSA) or Archer medical savings account (MSA) for the 2019 tax year up to the date such individual's 2020 federal income tax return is due without extension).[15] The deadline for making contributions to an HSA or Archer MSA for 2019 is extended to July 15, 2020.[16]

Not extended, however, is the deadline for making corrective distributions of excess deferrals made in 2019 to a workplace-based retirement plan. To avoid double taxation of an excess deferral (for the year in which it is made to the plan and also for the year it is returned to the employee), the excess deferral (and any income allocable to such amount through the end of the taxable year in which it is made) must be returned to the employee by April 15 of the year following the year of contribution.[17] The deadline is specified by the date itself; accordingly, the deadline for corrective distributions of excess deferrals made to work-based retirement plans in 2019 remains April 15, 2020.[18]

Notice 2020-18 only applies to federal income tax. The legislature of each state sets rules for the filing of state returns and the payment of state taxes. You should contact your personal tax advisor to determine how the Notice affects your specific situation and to inquire if there is any similar emergency tax relief from your state taxing authority.

For more information, please contact your PNC advisor.