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IRS Delays Deadlines Applicable to Employment Taxes, Employee Benefits, and Exempt Orgs
(Parker Tax Publishing June 2020)
The IRS is postponing deadlines for certain specified time-sensitive actions with respect to certain employment taxes, employee benefit plans, exempt organizations, and Coverdell education savings accounts on account of the ongoing COVID-19 pandemic. Additionally, the IRS is providing a temporary waiver of the requirement for a Certified Professional Employer Organization to file certain employment tax returns and their accompanying schedules electronically. Notice 2020-35.
In March, the IRS issued Notice 2020-17, which provides relief under Code Sec. 7508A(a) by postponing the due date for certain federal income tax payments from April 15, 2020, until July 15, 2020. The IRS subsequently issued Notice 2020-18, which superseded Notice 2020-17, and provided expanded relief, postponing the due date for filing federal income tax returns and for making federal income tax payments from April 15, 2020, until July 15, 2020. The IRS amplified Notice 2020-18 in Notice 2020-20 and provided additional relief, postponing certain federal gift (and generation-skipping transfer) tax return filings and payments from April 15, 2020, until July 15, 2020.
In April, the IRS issued Notice 2020-23, which provides additional relief for all types of federal tax return or other form filing obligations due to be performed (originally or pursuant to a valid extension) on or after April 1, 2020, and before July 15, 2020, by an "Affected Taxpayer." Notice 2020-23 also provides that the term "Affected Taxpayer" includes any person who performs "Time-Sensitive Actions" listed in either Reg. Sec. 301.7508A-1(c)(1)(iv) - (vi) or Rev. Proc. 2018-58, due to be performed (originally or pursuant to a valid extension) on or after April 1, 2020, and before July 15, 2020.
Thus, for example, under Notice 2020-23, Affected Taxpayers include persons described in Code Sec. 7508A(b), such as sponsors or plan administrators of qualified retirement plans, due to perform a Specified Time-Sensitive Action. In addition, Affected Taxpayers include exempt organizations with a federal tax payment, federal tax return, or other form filing obligation specified in Notice 2020-23, and exempt organizations performing time-sensitive acts listed in Rev. Proc. 2018-58, which includes the filing of Form 990 series annual information returns.
In Notice 2020-35, issued late last week, the IRS postpones deadlines for certain specified time-sensitive actions with respect to certain employment taxes, employee benefit plans, exempt organizations, and Coverdell education savings accounts on account of the ongoing COVID-19 pandemic. Specifically, the notice amplifies the definition of "Affected Taxpayer" and amplifies the definition of "Specified Time-Sensitive Actions." The notice provides that the revised deadline for an Affected Taxpayer to perform a Time-Sensitive Action is July 15, 2020, unless a different revised deadline is specified. In the case of Time-Sensitive Actions with respect to provisions of the Code for which there are parallel provisions in the Employee Retirement Income Security Act of 1974 (ERISA), the relief provided in Notice 2020-35 also applies for purposes of those provisions under ERISA.
In Notice 2020-35, the IRS also provides a temporary waiver of the requirement under Reg. Sec. 31.3511-1(g)(2) 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. The waiver applies only to Forms 941 filed for the second, third, and fourth quarter of 2020 and only to Forms 943 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.
Under Notice 2020-35, for purposes of the relief provided with respect to Time-Sensitive Actions, an Affected Taxpayer includes the following:
(1) with respect to employment taxes, employers who perform a Time-Sensitive Action (described below);
(2) with respect to employee benefit plans, the plan (including a Code Sec. 403(b) plan, a governmental Code Sec. 457(b) plan, a SEP plan described in Code Sec. 408(k), or a SIMPLE IRA plan described in Code Sec. 408(p)), or any sponsor, administrator, participant, beneficiary, disqualified person, or other person with respect to such a plan who performs a Time-Sensitive Action;
(3) with respect to exempt organizations, those persons performing a Time-Sensitive Action; and
(4) filers of a Form 5498, Form 5498-SA, or 5498-ESA for whom filing the form is a Time-Sensitive Action.
Notice 2020-35 describes the following as Time-Sensitive Actions to which the above relief applies:
Correction of Employment Tax Reporting Errors Using the Interest-free Adjustment Process under Code Sections 6205 and 6413
Actions to correct underpayments or overpayments pursuant to Code Sec. 6205 and Code Sec. 6413, respectively.
Qualified Retirement Plans
Funding waiver: Application for a funding waiver under Code Sec. 412(c) for a defined benefit pension plan that is not a multiemployer plan.
Multiemployer plan funding: With respect to a multiemployer defined benefit pension plan, actions due to be performed on or before the dates described in:
(1) Code Sec. 432(b)(3) for the certification of funded status and the notice to interested parties of that certification.
(2) Code Secs. 432(c)(1) and 432(e)(1) for the adoption of, and the notification to the bargaining parties of the schedules under, a funding improvement plan or rehabilitation plan.
(3) Code Secs. 432(c)(6) and 432(e)(3) for the annual update of a funding improvement plan and its contribution schedules, or rehabilitation plan and its contribution schedules, and the filing of those updates with the Form 5500 annual return.
CSEC plans: With respect to a CSEC plan, actions to be performed on or before the date described in:
(1) Code Sec. 433(c)(9) for making the contribution required to be made for the plan year.
(2) Code Sec. 433(f)(3)(B) for making required quarterly installments.
(3) Code Sec. 433(j)(3) for the adoption of a funding restoration plan.
(4) Code Sec. 433(j)(4) for the certification of funded status.
Form 5330: Filing of Form 5330 and payment of the associated excise taxes. 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 Notice 2020-35. Interest and penalties with respect to such postponed filing and payment obligations will begin to accrue on July 16, 2020.
Tax Exempt and Government Entities Division, Employee Plans Programs:
(1) Extension of initial remedial amendment period for Code Sec. 403(b) plans. With respect to the remedial amendment period and plan amendment rules for Code Sec. 403(b) plans described in Rev. Proc. 2017-18 and Rev. Proc. 2019-39, actions that are otherwise required to be performed on or before March 31, 2020, with respect to form defects or plan amendments. The deadline for those actions is postponed to June 30, 2020 (and "June 30, 2020" should be substituted for all references to "March 31, 2020" in Rev. Proc. 2017-18 and in Rev. Proc. 2019-39).
(2) Pre-approved defined benefit plans. With respect to pre-approved defined benefit plans, the deadline for the following actions is postponed until July 31, 2020:
(3) Adoption of a pre-approved defined benefit plan that was approved based on the 2012 Cumulative List;
(4) Submission of a determination letter application under the second six-year remedial amendment cycle; and
(5) Actions that are otherwise required to be performed with respect to disqualifying provisions during the remedial amendment period that would otherwise end on April 30, 2020.
(6) EPCRS. With respect to a compliance statement issued under VCP, implementation of all corrective actions, including adoption of corrective amendments, required by the compliance statement.
(7) Substitute mortality table. Request for approval of a substitute mortality table in accordance with Code Sec. 430(h)(3)(C).
Exempt Organizations
Form 990-N Electronic Notice Requirement for Certain Small Exempt Organizations: Electronic submissions of Form 990-N under Code Sec. 6033(i).
Time for Commencing a Suit for Declaratory Judgment Pursuant to Section 7428: Filings by organizations listed in Code Sec. 7428(a)(1) of an appropriate pleading for declaratory judgment with the United States Court of Federal Claims or the district court of the United States for the District of Columbia, within the period specified in Code Sec. 7428(b)(3).
Form 5498 Series
With respect to the Form 5498, IRA Contribution Information, Form 5498ESA, Coverdell ESA Contribution Information, and the Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, the due date for filing and furnishing the forms is postponed to August 31, 2020. 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.
For a discussion of tax return filing dates and tax payment dates, see Parker Tax ¶250,100 and Parker Tax ¶250,500, respectively. For a discussion of the IRS Voluntary annual Filing Season Program, see Parker Tax ¶271,160.
Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.
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