March 30, 2020
Stroock Special Bulletin
By: Etta Brandman, Jeffrey D. Uffner
As a further response to the COVID-19 emergency, on Friday, March 27, 2020, the U.S. Treasury Department and the IRS issued Notice 2020-20, which pushed back the April 15 gift tax return filing and payment deadline to July 15, 2020. This follows the IRS’s prior issuance of Notice 2020-18, which postponed the due date for both filing Federal income tax returns and making Federal income tax payments from April 15, 2020 to July 15, 2020. While this is a positive development for both taxpayers and their advisors alike, it should be noted that several other tax return filing and payment deadlines remain unchanged at this time, including for filing estate tax returns, tax exempt entity returns, and fiduciary income tax returns for fiscal year estates, along with their associated tax payment obligations.
Notice 2020-20 provides that any person with a Federal gift tax or generation-skipping transfer tax payment due or the requirement to file Form 709 (United States Gift and Generation-Skipping Transfer Tax Return) on April 15, 2020 is an “Affected Taxpayer” eligible for relief under this notice.
For an Affected Taxpayer, the due date for filing Form 709 and making payments of Federal gift and generation-skipping transfer tax due on April 15, 2020 is automatically postponed to July 15, 2020. This relief is automatic, and there is no requirement to file Form 8892 (Application for Automatic Extension of Time to File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax) to obtain the benefit of this filing and payment postponement until July 15, 2020. However, an Affected Taxpayer may choose to file Form 8892 by July 15, 2020, to obtain an extension to file Form 709 by October 15, 2020. Any Federal gift and generation-skipping transfer tax payments postponed by this notice will still be due on July 15, 2020.
As a result of the postponement of the due date for filing Form 709 and making Federal gift and generation-skipping transfer tax payments from April 15, 2020 to July 15, 2020, the period beginning on April 15, 2020 and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file a Form 709 or to pay Federal gift and generation-skipping transfer taxes shown on that Form and postponed by this notice. Interest, penalties and additions to tax with respect to such postponed Form 709 and payments will begin to accrue on July 16, 2020.
New York State Follows Suit to Match the Federal 3-Month Income Tax Filing and Income Tax Payment Postponement from April 15 to July 15
Governor Andrew M. Cuomo previously announced New York’s intention to match the Federal income tax relief that was granted through Notice 2020-18, which postponed the due date for both filing Federal income tax returns and making Federal income tax payments from April 15, 2020 to July 15, 2020.
On Sunday, March 29, the New York State Tax Department confirmed and executed upon this through its issuance of Notice N-20-2. This notice confirms that New York has extended the April 15, 2020 due date to July 15, 2020, for New York State personal income tax and corporation tax returns originally due on April 15, 2020. In addition, New York is allowing taxpayers to defer all related tax payments due on April 15, 2020 to July 15, 2020, without penalties and interest, regardless of the amount owed. This extension applies to individuals, fiduciaries (estates and trusts), and corporations. Tax returns due on April 15, 2020 will automatically be granted the filing and payment deadline extension and relief from penalties and interest without having to file an extension form.
Notice N-20-2 specifically provides that “2019 returns due on April 15, 2020, and related payments of tax or installments of tax, including installments of estimated taxes for the 2020 tax year, will not be subject to any failure to file, failure to pay, late payment, or underpayment penalties, or interest if filed and paid by July 15, 2020.” However, “[n]o extension is provided in this notice for the payment or deposit of any other type of state tax, or for the filing of any state information return.” Accordingly, it seems that New York 2nd quarter 2020 estimated income tax payments for calendar year taxpayers would still be due on June 15, 2020. Such a conclusion would be consistent with the approach taken by the IRS under Notice 2020-18, as reflected in Q&A 16 of the FAQ relating to Notice 2020-18 that was posted on the IRS website on March 24, 2020 (the “March 24 IRS FAQ”).[1]
Certain Other Federal Tax Return Filing and Payment Obligations Have Not Yet Been Changed – Including for Estate Tax Returns and Related Estate Tax Payment Obligations
Several other Federal tax return filing and payment obligations, as well as information return obligations, have not yet been changed by the IRS (or may lend themselves to a potential adverse interpretation by the IRS as to whether they have indeed been changed as a result of Notice 2020-18). Stroock lawyers are at the forefront of requesting immediate relief from the U.S. Department of Treasury and the IRS on such matters, including through their work with such organizations as the American College of Trust and Estate Counsel (ACTEC). These items include the following:
1. Filing Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, payment of federal estate and generation-skipping transfer tax (with relief also to apply to estate tax returns that are already on extension), and similar tax return filing and payment relief for related “Form 706 series” returns.
2. Making installment payments of estate tax under section[2] 6166, 6161 or 6163 that are due in 2020.
3. Extending the individual retirement account (IRA) contribution deadline of April 15, 2020.[3]
4. Filing Form 3520 (which relates to reporting certain transactions with foreign trusts and gifts from nonresident aliens), and payment of related tax.
5. Form 990 and related filings and payment of tax.
6. Form 990-PF and related filings and payment of tax.
7. Federal income tax filing and tax payment deadlines that are scheduled to occur prior to July 15, 2020, for fiscal year taxpayers such as estates, as well as for other categories of entities (with such relief also to apply to fiscal year income tax returns that are already on extension).
8. Filing Form 8971, Information Regarding Beneficiaries Acquiring Property from a Decedent.[4]
We will continue to keep you updated as new developments occur.
____________________________
For More Information:
[1] According to the March 24 IRS FAQ, “[t]he answers to these questions provide responses to general inquiries and are not citable as legal authority. Accordingly, the Treasury Department and the IRS are continuing to consider additional [Internal Revenue Bulletin] guidance on these issues addressed in these FAQs.”
[2] References herein to “section” are to the Internal Revenue Code of 1986, as amended.
[3] Such postponement relief to July 15, 2020 is indicated in Q&A 17 of the March 24 IRS FAQ.
[4] In addition to the above items, ACTEC requested postponement relief for filing the Form 709 Federal gift tax return, and for payment of Federal gift and generation-skipping transfer tax. Such relief was granted by Notice 2020-20.
This Stroock publication offers general information and should not be taken or used as legal advice for specific situations, which depend on the evaluation of precise factual circumstances. Please note that Stroock does not undertake to update its publications after their publication date to reflect subsequent developments. This Stroock publication may contain attorney advertising. Prior results do not guarantee a similar outcome.
March 30, 2020
Stroock Special Bulletin
By: Etta Brandman, Jeffrey D. Uffner
As a further response to the COVID-19 emergency, on Friday, March 27, 2020, the U.S. Treasury Department and the IRS issued Notice 2020-20, which pushed back the April 15 gift tax return filing and payment deadline to July 15, 2020. This follows the IRS’s prior issuance of Notice 2020-18, which postponed the due date for both filing Federal income tax returns and making Federal income tax payments from April 15, 2020 to July 15, 2020. While this is a positive development for both taxpayers and their advisors alike, it should be noted that several other tax return filing and payment deadlines remain unchanged at this time, including for filing estate tax returns, tax exempt entity returns, and fiduciary income tax returns for fiscal year estates, along with their associated tax payment obligations.
Notice 2020-20 provides that any person with a Federal gift tax or generation-skipping transfer tax payment due or the requirement to file Form 709 (United States Gift and Generation-Skipping Transfer Tax Return) on April 15, 2020 is an “Affected Taxpayer” eligible for relief under this notice.
For an Affected Taxpayer, the due date for filing Form 709 and making payments of Federal gift and generation-skipping transfer tax due on April 15, 2020 is automatically postponed to July 15, 2020. This relief is automatic, and there is no requirement to file Form 8892 (Application for Automatic Extension of Time to File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax) to obtain the benefit of this filing and payment postponement until July 15, 2020. However, an Affected Taxpayer may choose to file Form 8892 by July 15, 2020, to obtain an extension to file Form 709 by October 15, 2020. Any Federal gift and generation-skipping transfer tax payments postponed by this notice will still be due on July 15, 2020.
As a result of the postponement of the due date for filing Form 709 and making Federal gift and generation-skipping transfer tax payments from April 15, 2020 to July 15, 2020, the period beginning on April 15, 2020 and ending on July 15, 2020, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file a Form 709 or to pay Federal gift and generation-skipping transfer taxes shown on that Form and postponed by this notice. Interest, penalties and additions to tax with respect to such postponed Form 709 and payments will begin to accrue on July 16, 2020.
New York State Follows Suit to Match the Federal 3-Month Income Tax Filing and Income Tax Payment Postponement from April 15 to July 15
Governor Andrew M. Cuomo previously announced New York’s intention to match the Federal income tax relief that was granted through Notice 2020-18, which postponed the due date for both filing Federal income tax returns and making Federal income tax payments from April 15, 2020 to July 15, 2020.
On Sunday, March 29, the New York State Tax Department confirmed and executed upon this through its issuance of Notice N-20-2. This notice confirms that New York has extended the April 15, 2020 due date to July 15, 2020, for New York State personal income tax and corporation tax returns originally due on April 15, 2020. In addition, New York is allowing taxpayers to defer all related tax payments due on April 15, 2020 to July 15, 2020, without penalties and interest, regardless of the amount owed. This extension applies to individuals, fiduciaries (estates and trusts), and corporations. Tax returns due on April 15, 2020 will automatically be granted the filing and payment deadline extension and relief from penalties and interest without having to file an extension form.
Notice N-20-2 specifically provides that “2019 returns due on April 15, 2020, and related payments of tax or installments of tax, including installments of estimated taxes for the 2020 tax year, will not be subject to any failure to file, failure to pay, late payment, or underpayment penalties, or interest if filed and paid by July 15, 2020.” However, “[n]o extension is provided in this notice for the payment or deposit of any other type of state tax, or for the filing of any state information return.” Accordingly, it seems that New York 2nd quarter 2020 estimated income tax payments for calendar year taxpayers would still be due on June 15, 2020. Such a conclusion would be consistent with the approach taken by the IRS under Notice 2020-18, as reflected in Q&A 16 of the FAQ relating to Notice 2020-18 that was posted on the IRS website on March 24, 2020 (the “March 24 IRS FAQ”).[1]
Certain Other Federal Tax Return Filing and Payment Obligations Have Not Yet Been Changed – Including for Estate Tax Returns and Related Estate Tax Payment Obligations
Several other Federal tax return filing and payment obligations, as well as information return obligations, have not yet been changed by the IRS (or may lend themselves to a potential adverse interpretation by the IRS as to whether they have indeed been changed as a result of Notice 2020-18). Stroock lawyers are at the forefront of requesting immediate relief from the U.S. Department of Treasury and the IRS on such matters, including through their work with such organizations as the American College of Trust and Estate Counsel (ACTEC). These items include the following:
1. Filing Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, payment of federal estate and generation-skipping transfer tax (with relief also to apply to estate tax returns that are already on extension), and similar tax return filing and payment relief for related “Form 706 series” returns.
2. Making installment payments of estate tax under section[2] 6166, 6161 or 6163 that are due in 2020.
3. Extending the individual retirement account (IRA) contribution deadline of April 15, 2020.[3]
4. Filing Form 3520 (which relates to reporting certain transactions with foreign trusts and gifts from nonresident aliens), and payment of related tax.
5. Form 990 and related filings and payment of tax.
6. Form 990-PF and related filings and payment of tax.
7. Federal income tax filing and tax payment deadlines that are scheduled to occur prior to July 15, 2020, for fiscal year taxpayers such as estates, as well as for other categories of entities (with such relief also to apply to fiscal year income tax returns that are already on extension).
8. Filing Form 8971, Information Regarding Beneficiaries Acquiring Property from a Decedent.[4]
We will continue to keep you updated as new developments occur.
____________________________
For More Information:
[1] According to the March 24 IRS FAQ, “[t]he answers to these questions provide responses to general inquiries and are not citable as legal authority. Accordingly, the Treasury Department and the IRS are continuing to consider additional [Internal Revenue Bulletin] guidance on these issues addressed in these FAQs.”
[2] References herein to “section” are to the Internal Revenue Code of 1986, as amended.
[3] Such postponement relief to July 15, 2020 is indicated in Q&A 17 of the March 24 IRS FAQ.
[4] In addition to the above items, ACTEC requested postponement relief for filing the Form 709 Federal gift tax return, and for payment of Federal gift and generation-skipping transfer tax. Such relief was granted by Notice 2020-20.
This Stroock publication offers general information and should not be taken or used as legal advice for specific situations, which depend on the evaluation of precise factual circumstances. Please note that Stroock does not undertake to update its publications after their publication date to reflect subsequent developments. This Stroock publication may contain attorney advertising. Prior results do not guarantee a similar outcome.
