IRS Defers More Tax Returns and Payments

Posted on by July 5, 2020

Notice 2020-23, 2020-18 I.R.B. 748 (4/27/2020), defers the due dates for more federal tax returns and tax payments until July 15, as well as certain “time-sensitive actions.”

The deferral applies to the tax returns and payments described below that are due on (or on extension to) a date on or after April 1, 2020, and before July 15, 2020. This new notice amplifies Notice 2020-18, 2020-15 I.R.B. 590 (4/6/2020), and Notice 2020-20, 2020-16 I.R.B. 660 (4/13/2020), which provided similar relief for some returns and payments due on April 15.

The returns and payments more likely to be relevant to estate and trust practitioners are as follows:

  1. Fiduciary income tax returns (Form 1041) and tax payments. Returns due on April 15 were already deferred, so this deferral applies to estates with a tax year ending on January 31 or February 29, whose returns would have been due on May 15 or June 15.
  2. Estimated tax payments for individuals, estates and trusts, and others. Estimated tax payments due on April 15 were already deferred, so this deferral applies to trusts that need to make a second quarter estimated tax payment, and allows those payments to be made on July 15 instead of June 15.
  3. Estate tax returns (Form 706) and tax payments, including late filed returns under Rev. Proc. 2017-34, 2017-26 I.R.B. 1282 (which allows late returns for portability elections).
  4. Gift tax (and generation-skipping tax) returns and payments that are due along with a federal estate tax return.
  5. Decedent basis reports on Form 8971.
  6. Estate tax payments of interest or principal due as a result of an election under sections 6166 (15 year deferral for closely held businesses), 6161, or 6163.
  7. Exempt organization returns and payments for unrelated business taxable income (Form 990-T), for private foundations (Form 990-PF), and foundation excise taxes (Form 4720).

There is similar relief for returns and payments by corporations and partnerships.

[4/13/2020 Update: Some of the “time-sensitive actions” covered by Notice 2020-23 are described in “IRS Defers Due Dates for Time-Sensitive Actions.”]

Arbitration Clause in Contract by Trustee with Broker

An order denying preliminary objections that seek to enforce an arbitration clause is an interlocutory order that is appealable as of right, and an arbitration clause incorporated into a brokerage agreement signed by an individual trustee is enforceable against the beneficiaries of the trust who assert claims against the broker for allegedly excessive fees and breach of contract. In Re: Estate of Joseph B. Atkinson Jr., 2020 PA Super 87 (4/6/2020).

No Required Minimum Distributions in 2020

Posted on by April 5, 2020

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), P.L. 116-136, enacted March 27, 2020, added a new § 401(a)(9)(I) that eliminates any required minimum distribution for the year 2020. New § 401(a)(9)(I)(i) states that the required distribution requirements…

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Remote Notarization of Estate Planning Documents

Posted on by April 5, 2020

A new “temporary limited suspension” has been issued allowing remote notarization of powers of attorney, self-proving wills, and temporary guardianships during the COVID-19 emergency declaration.

As announced by the Pa. Department of State, notaries are allowed to use audio-visual communications as an alternative to personal appearances for those kinds of documents, provided the notary is an approved Pennsylvania electronic notary, uses an e-notary solution already approved by the Department of State, and indicates in the notary certificate that the notarial act was performed by means of communication technology.

Remote notarization is also allowed for advance health care directives/health care powers of attorney, living wills, and standby and temporary guardianships, for which notarization is not required but for which the Department describes notarization as “best practice.”

As previously reported, remote notarization was already allowed for certain real estate transactions.

These actions only relate to the notarization of documents, and have no effect on the requirement of witnesses, which are still required for powers of attorney, self-proving wills, and health care powers of attorney/living wills.

This most recent action by the Department of State was due in part to lobbying by the Pennsylvania Bar Association, with guidance from the Real Property, Probate and Trust Law Section.

Statutory Deferral of Pa. Income Taxes

Posted on by April 5, 2020

The Act of March 27, 2020, P.L. ___, No. 10 (H.B. 1232) amends the Fiscal Code to eliminate all interest, penalties, or other additions to income taxes otherwise due on April 15, 2020, until July 15, 2020.

The Department of Revenue had previously announced that the due date for income tax returns and payments would be deferred to July 15, 2020, because the due dates of those returns were linked to the due dates of comparable federal income tax returns. This new legislation confirms that interest, penalties, and additions to tax will not be imposed during the period from April 15 to July 15, that the deferral applies to both tax payments due for 2019 and declarations and estimated tax payments for the first quarter of 2020 for individuals, estates, and trusts, and that in calculations of interest and penalties for payments after July 15 the period from April 15 to July 15 will be disregarded.

There is also language in the act about “coordinating” due dates for local income tax returns.

There does not appear to be anything in the act about inheritance tax returns or payments.

No Action against Lawyer for Acts of Agent

An action for tortious interference with a right of inheritance cannot be brought against a lawyer for inter vivos transfers when the lawyer (a) prepared a power of attorney naming an agent who later abused the powers granted to the agent and (b) erroneously advised the agent as to the propriety of inter vivos transfers that reduced the estate of which the plaintiff was a beneficiary. Fiedler v. Spencer, 2020 PA Super 83 (4/2/2020).

Virtual (Videoconference) Probate Procedures

Posted on by March 31, 2020

Since publishing the news that Lehigh County has established a “virtual probate” process by videoconferencing, it’s been learned that five other counties have published similar procedures. The list (as of 3/31/2020) is as follows:

Most of the procedures require the participation of a lawyer, and some of the procedures seem to require that the lawyer and clients (personal representatives) all participate in the conference call from the same location, which would seem to defeat the “social distancing” goal of the videoconferencing process. That might not be the intention, or the procedures may change.

This situation will be changing quickly, and so the home pages of the relevant county should be checked before starting the probate process (see our directory of Registers of Wills), and a telephone call or email may be necessary or appropriate.

Virtual Probate in Lehigh County

Posted on by March 31, 2020

Lehigh County has announced a new procedure for the probate of wills by video conferencing, effective 3/30/2020.

The Montgomery County Bar Association reports that its Register of Wills is considering a similar procedure, but nothing appears on the Register’s website yet.

Perhaps other counties will follow suit.

[3/31/2020 Update: See “Virtual (Videoconference) Probate Procedures” for links to other counties known to have created similar procedures.]