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Acknowledging that taxpayers continue to be challenged by the ongoing COVID-19 pandemic, the IRS on March 29 released Notice 2021-21 announcing that individuals have until May 17 to meet certain deadlines that normally would fall on April 15 (including making individual retirement arrangement (IRA) contributions and filing certain refund claims).
This follows the March 17 release of IR-2021-59, in which the IRS announced that it was automatically extending the individual income tax filing and payment deadline for the 2020 tax year from April 15 to May 17. The federal tax filing deadline postponement to May 17 does not apply to state tax filings or payments, but some states are following the extended deadline. See our insight, IRS extends individual income tax filing and payment deadline, provides winter storm disaster relief, for more information.
Action item: Individual taxpayers and their advisors should study the specifics set forth in Notice 2021-21 regarding the additional tax deadlines postponed until May 17. Individuals also should continue to calculate and pay their 2021 first-quarter estimated tax payments by April 15 as the Notice does not postpone the April 15 deadline for estimated tax payments.
Notice 2021-21 provides that the due date for filing federal income tax returns in the Form 1040 series and making federal income tax payments in connection with one of those forms having an original due date of April 15 is automatically postponed to May 17. Taxpayers are not required to file any form, including Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to obtain this relief. The Form 1040 series includes:
The relief in Notice 2021-21 includes the filing of all schedules, returns, and other forms that are filed as attachments to the Form 1040 series or that are required to be filed by the due date of the Form 1040 series, including (for example):
Elections that are made or required to be made on a timely filed Form 1040 series (or attachment to such form) will be considered timely made if filed on such form or attachment, as appropriate, on or before May 17.
As a result of this postponement, the period beginning on April 15 and ending on May 17 will be disregarded on the calculation of any interest, penalty, or addition to tax for failure to file the federal income tax returns or to pay any federal income taxes postponed by Notice 2021-21. Interest, penalties, and additions to tax with respect to such postponed federal income tax filings and payments will begin to accrue on May 18.
The postponement of the due date for filing certain federal income tax returns as provided in the most recent Notice also automatically postpones to May 17 the time for individual taxpayers to make 2020 contributions to their IRAs (including Roth IRAs), health savings accounts, Archer Medical Savings Accounts, and Coverdell education savings accounts. This postponement also applies to the time for reporting and payment of the 10% additional tax on amounts includible in gross income from 2020 distributions from IRAs or workplace-based retirement plans.
Notice 2021-21 also postpones to June 30 the due date for Form 5498, IRA Contribution Information, series returns related to these accounts. The period beginning on the original due date of those forms and ending on June 30 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 July 1.
Individual taxpayers with a period of limitations to file a claim for credit or refund of federal income tax expiring on or after April 15 and before May 17 have until May 17 to file those claims for credit or refund. The postponement is limited to claims properly filed on the Form 1040 series or on a Form 1040-X, Amended U.S. Individual Income Tax Return. The period beginning on April 15 and ending on May 17 will be disregarded in determining whether the filing of those claims is timely.
The IRS announced in Notice 2021-21 that it is giving individual taxpayers [all individuals get the extension even if not “challenged by the ongoing COVID-19 pandemic”] until May 17 to meet certain deadlines that normally would fall on April 15 (including making IRA contributions and filing certain refund claims). The relief in Notice 2021-21 includes the filing of all schedules, returns, and other forms that are filed as attachments to the Form 1040 series or are required to be filed by the due date of the Form 1040 series, but does not postpone the April 15 deadline for 2021 first-quarter estimated tax payments. Accordingly, taxpayers need to calculate and pay their first-quarter estimated tax payments by April 15, monitor developments in this area, and watch for any updates affecting upcoming tax filings.
Ruth Perez Kim
Partner, Tax Controversy and Regulatory Services, PwC US
Managing Director, Tax Controversy and Regulatory Services, PwC US