COVID-19 and Taxes

By now you have most likely heard that the IRS has extended the time for filing income tax returns to July 15, 2020.  This is an automatic extension and does not require any kind of filing by the taxpayer. The IRS has issued two other notices that expand on the tax filing extension.

Below is a summary of those notices published by the IRS as well as a summary of a Notice from the IRS pertaining to High Deductible Health Plans.  The IRS has also issued notices pertaining to tax credits to employers (and possible self-employed individuals) related to expanded paid-sick leave but those are not covered in this post.

Notice 2020-15 (“Notice 15”)

This notice deals specifically with high deductible health plans and expenses related to COVID-19.  Per Notice 15, a health plan that otherwise meets the requirements of a high deductible health plan (“HDHP”) will not fail to be an HDHP purely because the HDHP provides health benefits associated with testing for and treatment of COVID-19 without a deductible or with a deductible below the minimum deductible for an HDHP.

Individuals covered by an HDHP will not be disqualified as an eligible individual for purposes of determining whether the individuals can make tax-favored contributions to a health savings account.

Notice 15 also specifically provides that “all medical care services received and items purchased associated with testing for and treatment of COVID-19 that are provided by a health plan without a deductible, or with a deductible below the minimum annual deductible otherwise required under section 223(c)(2)(A) for an HDHP, will be disregarded for purposes of determining the status of the plan as an HDHP.”

Notice 2020-18 (“Notice 18”)

On March 18, 2020, the IRS issued Notice 2020-17, which postponed the due date for certain Federal income tax returns until July 15, 2020.  The IRS later issued Notice 18 to restate and expand the relief granted by Notice 2020-17.

According to Notice 18, the due date for filing a Federal income tax return and making any income tax payments is automatically extended to July 15, 2020.  This extension is automatic and applies to any person with a Federal income tax payment or Federal income tax return due by April 15, 2020.

The IRS also made clear that the term “person” is defined to include “an individual, a trust, estate, partnership, association, company or corporation….”

It is important to note that Notice 18 applies solely to Federal income tax returns and payments due on April 15, 2020 and to Federal estimated income tax payments due on April 15, 2020.  No extension is provided in Notice 18 for the payment or filing of any other Federal tax or return.

IRS Notice 2020-20 (“Notice 20”)

Per the IRS, the purpose of Notice 20 is to amplify the relief provided in Notice 18, discussed above.

Notice 20 provides that the deadline for filing IRS Form 709 (United States Gift and Generation-Skipping Transfer Tax Return) and for paying any gift tax or generation-skipping transfer tax due is automatically extended until July 15, 2020.

As with the other extensions, this extension is automatic and will not require the filing of Form 8892.  A person may still file Form 8892 to receive an automatic 6-month extension for filing their IRS Form 709, but it is important to note that this extension will start from the April 15, 2020 deadline and not the extended July 15, 2020 deadline.  Therefore, an extension granted pursuant to Form 8892 will result in the Form 709, and any taxes owed, needing to be filed on or before October 15, 2020.  A person wishing to extend their time for filing the gift tax return will have until July 15, 2020 to do so but, again, the extension is only until October 15, 2020.

John Conner is a member of the firm’s Estate Planning, Probate & Trusts team.