On March 11, 2020, the World Health Organization declared that the COVID-19 outbreak was officially a pandemic as rates of infection rose significantly in the U.S. and across the world. On March 13, 2020, President Donald Trump declared a national emergency in the United States. To combat the spread of infection, businesses shut down and many people were confined to their homes under lockdown orders. Due to this freeze of daily life, the Department of Treasury extended the tax filing deadline from April 15, 2020 to July 15, 2020 for the 2019 tax year. The Secretary of Treasury is empowered during a federally declared disaster to extend up to one year any deadlines relating to filing a tax return, paying any tax, filing a Tax Court petition, bringing suit or assessing tax, making a notice of demand, instituting a collection by levy, determining the amount of any credit or refund, or determining the amount of penalties and interest during a tax period. 26 U.S.C. 7508A(a).
One year later, the COVID-19 pandemic still rages in the United States and surges of infection rates continue to strike every few months. In addition, the delay in processing tax returns and short-staffing at the Internal Revenue Service (apparently there were 10 million pieces of unopened mail) have created a serious backlog in government operations. In response to the ongoing issues, the U.S. Department of Treasury and the Internal Revenue Service issued Notice 2021-59 to provide the following relief to taxpayers for the 2020 tax year:
- Any individual taxpayer obligated to file a Form 1040 series return (e.g. Form 1040, Form 1040-SR, Form 1040-NR, etc.) or make a federal income tax payment associated with these returns by April 15, 2021 (for tax year 2020) will have the due date automatically postponed to May 17, 2021. Taxpayers will not have to file any forms to request this postponement and there is no limit on the amount of payment due to be postponed. Any possible interest, penalties or addition to tax for failure to file a return or failure to pay the tax will be postponed during this time.
- The deadline for taxpayers to make 2020 contributions to their individual retirement accounts (IRAs and Roth IRAs), health savings accounts (HSAs), Archer Medical Savings Accounts (Archer MSAs), and Coverdell education savings accounts (Coverdell ESAs) is automatically extended from April 15, 2021 to May 17, 2021. This also extends the deadline for payment of the 10% additional tax on amounts included in gross income for 2020 due to early withdrawals.
- Any individual taxpayer who has a deadline of April 15, 2021 to make a claim for refund or credit related to the filing of a Form 1040 series return will automatically have that deadline extended to May 17, 2021.
However, this relief does NOT cover the following:
- All federal tax returns and federal income tax payments not related to the Form 1040 series are still due April 15, 2021. This includes estate and trust income tax returns (Form 1041), partnership tax returns (Form 1065), corporation tax returns (Form 1020 and 1020S).
- The postponement only applies to federal tax payments and federal tax returns for tax year 2020 due April 15, 2021. Other tax years where the taxpayer did not file a return or pay a tax are not affected, so penalties and interest will accrue as normally provided under the Internal Revenue Code.
- These extensions do not apply to quarterly estimated tax payments due in 2021. Taxpayers must still make their estimated quarterly tax payment on or before April 15, 2021 to avoid penalties. Generally, estimated tax payments must be made by individuals whose income is not subject to income tax withholding such as self-employment income, interest, dividend or rental income.
This new deadline does not affect the IRS relief announced earlier in the year that provided an extension to victims of the February winter storms in Texas, Oklahoma and Louisiana to file their various individual and business tax returns (and make federal tax payments) on or before June 15, 2021. The general extension to May 17, 2021 does not alter the June 15, 2021 deadline provided to these affected taxpayers.
These extensions do not apply to state and local tax returns. The 42 states of the union (including Michigan) that require income tax returns will determine their own extensions or other tax relief, if any.
Despite the extended deadlines, taxpayers are still encouraged to file their federal income tax returns as soon as possible to receive your refund. If you need to get your federal tax returns filed right away, our tax attorneys are available to help. Our offices remain open to assist you with all of your legal and tax needs. If you have questions about the 2021 tax filing deadlines or any other aspect of federal taxation, then do not hesitate to contact Kershaw, Vititoe & Jedinak PLC for assistance today.