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IRS Expands Automatic Postponement of Due Dates

Expatriate's Perspective on Pandemic Relief-Update

Postponement Not Limited to Income Tax Returns and Payments Due on April 15, 2020

The IRS issued Notice 2020-23 on April 9, 2020 to expand the automatic postponement of due dates for filing and paying federal taxes, which we discussed in our last newsletter. Most notably, postponement under this new notice is no longer confined to federal income tax returns and payments that are due on April 15, 2020.[1] Similar to the previous notices, postpone granted by Notice 2020-23 is automatic; no extension forms or application of any kind will need to be submitted for a taxpayer to be accorded this relief.

Summarized below is how the expanded relief could benefit U.S. expatriates:

  • Elections: Elections that are required to be made on a timely filed return eligible for postponement will be considered timely if such returns are filed by July 15, 2020.
  • Estimated Tax Payments: The due date of the second quarter’s estimate federal income tax payment is postponed from June 15, 2020 to July 15, 2020. This means both the first and second quarters’ estimated federal income tax payments will now be due on July 15, 2020.
  • Gift Tax Returns: The due date for Form 709[2] is postponed to July 15, 2020.
  • Federal Returns Common to Expatriates[3]: The due dates of these returns are postponed to July 15, 2020 -
    • Form 3520 (for foreign trusts and receipt of certain foreign gifts)
    • Form 5471 (for officers, directors, or shareholders in certain foreign corporations)
    • Form 8621 (for direct or indirect shareholders of a passive foreign investment company such as foreign mutual funds or ETF)
    • Form 8858 (for owners of a foreign disregarded entity or foreign branch)
    • Form 8865 (for reporting with respect to certain foreign partnerships)

Observation: Expatriates who paid premiums for insurance policies issued by foreign insurers and are obliged to file a Form 720 for excise tax should be aware that the due dates for such quarterly returns and tax payments are not postponed even though the first quarter’s return due on April 30 falls between April 1, 2020 and July 15, 2020 covered by this notice.

Additional Time for Certain Time-Sensitive Taxpayer Actions

In addition to the postponement of due dates for various federal returns and tax payments, this notice provides additional time to taxpayers for Specified Time-Sensitive Actions, as defined under Section III.C, which are due to be performed between April 1, 2020 and July 14, 2020. Taxpayers will have until July 15, 2020 to carry out such actions. These include filing petitions with the Tax Court, reviewing its decisions, filing claims for credits or refund of any tax, and bringing suits upon such claims.

Observations:
Refund Claim: Statute of limitations on refund claims for 2016 tax returns generally expires on April 15, 2020[4] unless such a return was extended, in which case, the extended due date would be taken into account[5]. If the expiry of the statute of limitations falls between April 1, 2020 and July 14, 2020, it is automatically postponed and the taxpayer must file the claim no later than July 15, 2020.

Like-Kind Exchange: Taxpayers whose deadline for the 45-day identification period or 180-day replacement period falls within April 1, 2020 and July 14, 2020 may now have until July 15, 2020 to complete the exchange.[6]

Qualified Opportunity Zones Investment: Taxpayers whose 180-day investment deadline falls between April 1, 2020 and July 14, 2020 will now have until July 15, 2020 to complete the investment.

Additional Time for Certain IRS Actions

This notice also grants a 30-day postponement to the government for certain Time-Sensitive IRS Actions, such as the following, if the last date for performance of the action is between April 6, 2020 and July 14, 2020.

  • Assessment of tax;
  • Issuance of notices or demands for the payment of any tax;
  • Collection actions for tax by levy, lien, or other means;
  • Filing suits with respect to tax; and
  • Allowance of credit or refund of tax

The application of this postponement is limited to the following types of taxpayers:

  • Persons who are currently under examination;
  • Persons whose cases are with the Independent Office of Appeals; and
  • Persons who, during the period between April 6, 2020 and July 14, 2020, filed amended returns or submit tax payments with respect to which the time for assessment would otherwise expire during this period.

[1] See Section III.A for a full list of the Specified Filing and Payment Obligations eligible for postponement.
[2] Postponed under Notice 2020-20 and amplified by Notice 2020-23
[3] Section III.B
[4] IRC Sec. 6511(a) and Treas. Reg. Sec. 301.6511(a)-1
[5] IRC Sec. 6513(a)
[6] Section III.A and Rev. 2018-58

American Expatriate Tax is a part of Contexo Global Mobility Solutions & Tax Consulting Ltd. registered in Hong Kong. Together, we help companies and individuals navigate through the complexities of global mobility and related tax issues. Here is where you will find a blend of expertise from Big 4 accounting firms and Fortune Global 500 companies but the attention of a boutique consulting practice. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.