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COVID-19 Tax Relief Update: Newly Issued IRS Notice Includes Rare Retroactive Relief

Posted In COVID-19 Tax

Released by the IRS on the eve of Good Friday/2nd day of Passover, the retroactively effective relief under IRS Notice 2020-23 had an immediate and direct effect on many clients.

For example, about a week before issuance of this Notice, our client made a timely 706 extension request due the first week of April, along with a check for the required accompanying payment of estimated estate tax due. Upon issuance of this Notice, and with prompt, but careful, analysis of its plain language - interpreted on a consistent basis with other recently issued COVID-tax relief Notices - we were able to take expedited action Friday afternoon to fully recover the substantial payment previously made by the client with the now premature 706 extension request.

The retroactive effect of this Notice creates a taxpayer recovery opportunity, albeit with a small window. An extension payment of estimated tax required to accompany a 706 extension request -- an extension request not due in the first instance by virtue of the subsequent issuance of Notice 2020-23, retroactively delaying the due date of that 706 and its associated payment of estate tax by 3 1/2 months -- similarly isn’t due or payable, and becomes recoverable . . . if the taxpayer can act quickly enough with its issuer to recapture it.

In addition, this Notice expands further upon the relief provided in Notice 2020-18 and Notice 2020-20, including extension to July 15 of the following filing and payment deadlines that were otherwise due between April 1, 2020 (retroactively) and July 15, 2020:

  • Correction of the anomaly that the 2nd estimated income tax payment was due June 15 (before the 1st estimated payment previously extended to July 15)
  • Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return filings, and payments of estate and generation-skipping transfer tax due thereunder.  
  • Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return filed pursuant to Revenue Procedure 2017-34 (relating to Portability Returns)
  • Extension of the deadline to claim refunds from 2016. The Notice also suspends associated interest, additions to tax, and penalties for late filing or late payment until July 15, 2020.

To see all the deadlines extended for individuals, estates, corporations and others by Notice 2020-23, please click here

Should you have any questions or concerns, please do not hesitate to reach out to the Tax, Estates & Business Practice Group of Morris James LLP.

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