Gift Tax Returns Not Deferred

Posted on by July 5, 2020

[3/27/2020 Update: Notice 2020-20, 2020-16 I.R.B. 660 (4/13/2020), “amplifies” Notice 2020-18 and allows the same three month deferral for gift tax returns and gift tax payments that was provided by Notice 2020-18 for income tax returns and payments.]

As explained in an earlier posting, IRS Notice 2020-18 has deferred all income tax return filings and income tax payments until July 15 due to the COVID-19 pandemic.

Some practitioners have wondered if Notice 2020-18 also defers the due date for federal gift tax returns because they are also due on April 15 and an extension of time to file an income tax return also extends the time to file a gift tax return. Unfortunately, that seems unlikely, for two reasons:

  1. The notice itself is explicitly limited to federal income tax relief. It says that the relief that is provide is “solely” for federal income tax payments and “Federal income tax returns due on April 15, 2020, in respect of an Affected Taxpayer’s 2019 taxable year.” It also states that “No extension is provided in this notice for the payment or deposit of any other type of Federal tax, or for the filing of any Federal information return.”
  2. The statutory authority for the notice (20 U.S.C. § 7508A(a)) does not speak of “due dates” or “extensions” but allows the Secretary to “specify a period of up to 1 year that may be disregarded” in determining whether returns or payments were made within the time allowed, or in determining interest or penalties. So, technically speaking, the due date for income tax returns is still April 15 but the period from April 15 to July 15 is being disregarded.

Because of the absence of any certainty about the effect of the notice on gift tax returns, it is suggested that Form 8892 be filed if a gift tax return is required and can’t be filed by April 15. (It is also still possible to file a Form 4868 to get a six month extension of time to file both the federal income tax return and federal gift tax return.)

[3/24/2020 Update: The Internal Revenue Service has published a FAQ (“Filing and Payment Deadlines Questions and Answers“) that confirms that the time for filing gift tax returns and making gift tax payments has not be deferred. See Q7.]

Three Month Deferral for Income Tax Returns and Payments

Posted on by July 5, 2020
In Notice 2020-18, 2020-15 I.R.B. 590 (4/6/2020), the Internal Revenue Service has announced that, because of the COVID-19 pandemic, income tax returns and payments that are now due on April 15 can be deferred until July 15 without any penalties or interest. The deferral of income tax payments applies to both tax payments for 2019 and estimated tax payments for 2020. This notice supersedes Notice 2020-17, which provided for a deferral of income tax payments but not a deferral of the filing of income tax returns. Interest and penalties may apply after July 15, but the period from April 15 to July 15 will be excluded from any interest or penalty calculations. And, unlike Notice 2020-17, there is no dollar limitation on the amount of tax that may be deferred. Unlike Notice 2020-17, this notice explicitly applies to estates and trusts as well as individuals and corporations. According to Notice 2020-18, the relief is limited to income tax returns and payments due on April 15, and does not apply to any other tax payment or type of return. There is (as yet) no similar relief for Pennsylvania income tax filings or payments. There is a web page for current Department of Revenue alert details for coronavirus information. (Note: This changed on 3/21/2020.) [3/24/2020 Update: The Internal Revenue Service has published a FAQ (“Filing and Payment Deadlines Questions and Answers“) with additional information about the application of Notice 2020-18.]

Filing Inheritance Tax Returns during the Pandemic

Posted on by March 19, 2020

The Pa. Department of Revenue recently posted the following on its website:

“Due to the recent closing of commonwealth and county office buildings to help prevent the spread of COVID-19, the Department of Revenue is aware that taxpayers have been unable to meet their Inheritance Tax filing and payment obligations. To address these concerns, the department is asking County Register of Wills offices to implement the following procedures when their operations resume:

“* If a taxpayer is filing a return or making a payment and indicates that either was due during the timeframe that offices were closed, please place a date received as of March 12, 2020, on the return and the receipt.

“* In addition, the department is making system modifications to not apply penalties for payments received late, that otherwise would have been timely during office closures.”

Three Month Deferral for Federal Income Tax Payments

Posted on by March 20, 2020

Note: Notice 2020-17 was superseded by Notice 2020-18.

In Notice 2020-17, the Internal Revenue Service has announced that, because of the COVID-19 pandemic, income tax payments that are now due on April 15 can be deferred until July 15 without any interest or penalties. This applies to both tax payments for 2019 and estimated tax payments for 2020, but the deferral is limited to $1 million for individuals and $10 million for corporations.

There is (as yet) no deferral of the filing deadline, so taxpayers must either file returns by April 15 or file for an extension of time to file.

Interest and penalties may apply after July 15, but the period from April 15 to July 15 will be excluded from any interest or penalty calculations.

It is believed that this relief applies to estates and trusts as well as individuals and corporations.

There is (as yet) no similar relief for Pennsylvania income tax filings or payments.

Philadelphia Court Closings

Philadelphia courts (and related offices) will be closed until at least April 1.

Disposition of Wife’s Ashes with Husband’s

Although the two children of the decedent had different claims about their mother’s wishes for the disposition of her cremated remains, they both testified that she wished her ashes to be disposed of along with the ashes of her deceased husband, and so the court directed that the ashes of the decedent be disposed of with the ashes of her husband, which had not yet been determined. J.A.K. v. S.H., 10 Fid.Rep.3d 59 (Lycoming O.C. 2020).

Common Law Marriage not Proven

Although there was evidence of cohabitation and a reputation as husband and wife, there was no evidence of joint income tax returns and no testimony by the alleged surviving wife, and there was evidence that the parties had not married and that they had attempted to obtain a marriage license before the death of the decedent, so the evidence was not clear and convincing and the marriage was not established. Fitz Estate, 10 Fid.Rep.3d 51 (York O.C. 2019), aff’d 337 MDA 2019 (Super. Ct. 1/14/2020), appeal den., 62 MAL 2020 (7/15/2020).