Tax Filing Deadline Update….The IRS has extended the deadlines for Employment and Benefit Plans because of the CO-19…(Notice 2020-35)

Be aware that the IRS has issued this week some major changes in tax filing deadline for several tax filings. The new filing dates range from June 30 through August 31, 2020.

Take note of these changes and interest and penalties may accrue if you miss a key filing deadline. Stay tuned for more changes in the coming weeks. Stay safe !

Tax Filing Deadline Update….The IRS has extended the deadlines for Employment and Benefit Plans because of the CO-19 Notice 2020-35

https://www.irs.gov/pub/irs-drop/n-20-35.pdf

Be aware that the Internal Revenue Service this week in Notice 2020-35, 2020-25 IRB has postponed deadlines for specified time-sensitive actions with respect to certain employment taxes, employee benefit plans, exempt organizations, Individual Retirement Accounts (IRAs), Health Savings Accounts (HSAs) and Coverdell education savings accounts due to the ongoing COVID-19 pandemic.

Background. Code Sec. 7508A gives the IRS the authority to postpone the time for performing certain acts under the internal revenue laws for a taxpayer determined by the IRS to be affected by a “federally declared disaster.”

Under Code Sec. 7508A(a), a period of up to one year may be disregarded in determining whether the performance of certain acts is timely under the internal revenue laws.

Code Sec. 7508A(b) provides that, in the case of a pension or other employee benefit plan, or any sponsor, administrator, participant, beneficiary, or other person with respect to such a plan, affected by a federally declared disaster, the IRS may specify a period of up to one year that may be disregarded in determining the date by which any action is required or permitted to be completed.

If the IRS exercises that authority, no plan will be treated as failing to be operated in accordance with its terms solely because the plan disregards any period pursuant to this relief.

On March 13, 2020, the President declared a federal disaster (Emergency Declaration) due to the emerging COVID-19 pandemic. Following the Emergency Declaration, the IRS published guidance utilizing the authority provided under Code Sec. 7508A to postpone certain deadlines in the case of a federally declared disaster.

Tax deadlines extended. The IRS has now postponed deadlines for certain specified time-sensitive actions with respect to certain employment taxes, employee benefit plans, exempt organizations, IRAs, HSAs, and Coverdell education savings accounts on account of the ongoing COVID-19 pandemic.

Deadlines extended to June 30, 2020. With respect to the remedial amendment period and plan amendment rules for section 403(b) plans, actions that were otherwise required to be performed on or before March 31, 2020, with respect to form defects or plan amendments are postponed to June 30, 2020.

Deadlines extended to July 15, 2020. The following tax deadlines have been extended to July 15, 2020:

  • Employers correcting employment tax reporting errors using the interest-free adjustment process.
  • Employers correcting employment tax underpayments or overpayments.
  • Exempt organizations filing Form 990-N, e-Postcard.
  • Exempt organizations commencing a declaratory judgment suit.
  • Single employer defined benefit plans applying for a funding waiver.
  • Multi-employer defined benefit plans:
    1. Certifying funded status and giving notice to interested parties of that certification.
    2. Adopting, and notifying the bargaining parties of the schedules under, a funding improvement or rehabilitation plan; and
    3. Providing the annual update of a funding improvement plan and its contribution schedules, or rehabilitation plan and its contribution schedules, and filing those updates with their annual return.
  • Cooperative and small employer charity (CSEC) plans
    1. Making contributions required to be made for the plan year.
    2. Making required quarterly installments.
    3. Adopting a funding restoration plan; and
    4. Certifying funded status.
  • Employee benefit plans filing Form 5330, Return of Excise Taxes Related to Employee Benefit Plans, and paying the associated excise tax.

In addition, the period beginning on March 30, 2020, and ending on July 15, 2020, will be disregarded in the calculation of any interest or penalty for failure to file the Form 5330 or to pay the excise tax postponed by the notice. Interest and penalties with respect to such postponed filing and payment obligations will begin to accrue on July 16, 2020.

Deadlines extended to July 31, 2020. Defined benefit plans have until July 31, 2020:

  1. To adopt a pre-approved defined benefit plan that was approved based on the 2012 Cumulative List.
  2. To submit a determination letter application under the second six-year remedial amendment cycle; and
  3. To take actions that are otherwise required to be performed regarding disqualifying provisions in a plan during the remedial amendment period that would otherwise have ended on April 30, 2020.

Deadlines extended to August 31, 2020. The due date for filing and furnishing Form 5498, IRA Contribution Information, form 5498-ESA, Coverdell ESA Contribution Information, and the Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, is postponed to August 31, 2020.

In addition, the period beginning on the original due date of those forms and ending on August 31, 2020, will be disregarded in the calculation of any penalty for failure to file those forms. Penalties with respect to such a postponed filing will begin to accrue on September 1, 2020.

Waiver of electronic filing requirement. The IRS has also provided a temporary waiver of the requirement that Certified Professional Employer Organizations (CPEOs) file certain employment tax returns, and their accompanying schedules, on magnetic media (including electronic filing). This temporary waiver is extended to all CPEOs; individual requests for waiver do not need to be submitted.

This waiver applies only to Forms 941, Employer’s Quarterly Federal Tax Return, filed for the second, third, and fourth quarter of 2020 and only to Forms 943, Employer’s Annual Federal Tax Return for Agricultural Employees, filed for calendar year 2020, and their accompanying schedules. Accordingly, CPEOs are permitted, but not required, to file a paper Form 941, and its accompanying schedules, in lieu of electronic submission for the second, third, and fourth quarters of calendar year 2020. In addition, CPEOs are permitted, but not required, to file a paper Form 943, and its accompanying schedules, in lieu of electronic submission for calendar year 2020.

References. For extension of tax-related deadlines for taxpayers affected by disasters, see FTC 2d/FIN ¶S-8502; United States Tax Reporter ¶75,08A4.

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About William Murphy

William F. Murphy is the owner of Murphy Financial Group, P.C. The firm emphasizes in providing tax consulting and financial planning services to corporations, professional practices and individuals. He also provides consultation services on tax and financial planning issues to various news and publishing organizations on current tax law changes occurring within federal and state government. He is also the author of the “Murphy Minute” that is syndicated through various news organizations. Mr. Murphy is also associated with the law firm of Mallor Grodner LLP. The firm has offices in both Indianapolis and Bloomington Indiana. He assists in providing tax, valuation and financial analysis services focusing in the areas of Family law and business tax planning. https://www.linkedin.com/in/william-f-murphy-cpa-pfs-abv-cff-cgma-b38aa713/.