Tag: IRS

Non-Residents Get Tax Relief From IRS During Pandemic

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Summary

On June 12, 2020, the IRS updated its FAQs for Nonresident Alien Individuals and Foreign Businesses with Employees or Agents Impacted by COVID-19 Emergency Travel Disruptions.
 
The FAQ provides that a nonresident alien, foreign corporation, or a partnership in which either is a partner (Affected Person) may choose an uninterrupted period of up to 60 calendar days, beginning on or after February 1, 2020, and on or before April 1, 2020 (the COVID-19 Emergency Period), during which services or other activities conducted in the United States will not be taken into account in determining whether the nonresident alien or foreign corporation is engaged in a U.S. trade or business (USTB), provided that such activities were performed by one or more individuals temporarily present in the United States[1] and would not have been performed in the United States but for COVID-19 Emergency Travel Disruptions (e.g., canceled flights and disruptions in other forms of transportation, shelter-in-place orders, quarantines, and border closures, or they may feel unsafe traveling during the COVID-19 Emergency due to recommendations to implement social distancing and limit exposure to public spaces).
 
The FAQs also provide that during an Affected Person’s COVID-19 Emergency Period, services or other activities performed by one or more individuals temporarily present in the United States will not be taken into account to determine whether the nonresident or foreign corporation has a permanent establishment (PE), provided that the services or other activities of these individuals would not have occurred in the United States but for COVID-19 Emergency Travel Disruptions.
 
In addition, the FAQs are updated to provide that an Affected Person’s income earned during the COVID-19 Emergency Period will not be subject to the 30% gross basis tax imposed under section 871(a) or section 881(a) solely because the Affected Person is not treated as having a USTB or PE under the FAQs.
 
In all events, the Affected Person should retain contemporaneous documentation to establish the period chosen as the COVID-19 Emergency Period and that the relevant business activities conducted by individuals temporarily present in the United States during the COVID-19 Emergency Period would not have been undertaken in the United States but for COVID-19 Emergency Travel Disruptions. The Affected Person should be prepared to provide that documentation upon request by the IRS.
 
Lastly, the FAQs provide Nonresident aliens and foreign corporations (including those that are partners in partnerships) may make protective filings of their annual U.S. tax returns, even if they believe they are not required to file for the 2020 taxable year because they were not engaged in a USTB, to avail themselves of the benefits and protections that arise from such filings (such as those relating to deductions, statutes of limitations, and claiming tax treaty-based relief).
 

[1] For purposes of the FAQs, an “individual temporarily present in the United States” means an individual who is present in the United States on or after February 1, 2020, and on or before April 1, 2020, and is a nonresident alien, or a U.S. citizen or lawful permanent resident who had a tax home as defined in section 911(d)(3) outside the United States in 2019 and reasonably expects to have a tax home outside the United States in 2020. In addition, to determine the nonresident status of an alien, the relief provided in Rev. Proc. 2020-20 is applicable.

COVID-19 Postponement Relief Under Notice 2020-23 Expanded By IRS

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On April 9,2020, the IRS issued Notice 2020-23, which contains expanded relief for those tax forms and other filings that are postponed as was originally announced last month.  See the IRS Coronavirus website for more details.

First, the payments and returns eligible for relief are expanded.  Any tax return or payment due on or after April 1, 2020, and before July 15, 2020, is now automatically postponed to July 15, 2020—no extension forms, letters, or other forms of documentation or communication are required to make use of this relief.  This will now cover, for example, calendar-year 2020 second quarter estimated tax payments, among other things. If an Affected Taxpayer as defined by the notice needs additional time to file, such taxpayer may choose to file the appropriate extension form by July 15, 2020, to obtain a filing extension. However, the taxpayer’s extension date may not exceed the original statutory or regulatory extension date. For example, a taxpayer can file Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, by July 15, 2020, to extend the due date of their 2019 calendar year tax return (generally due on April 15, 2020). However, the extension granted will only be to October 15, 2020, which is the original extension date for 2019 calendar year individual tax returns.

Second, the IRS has expanded the forms that are now postponed.  These forms now include:  1040-series, 1120-series, 1065, 1066, 1041, 706 (estate tax payments and returns), 709 (gift tax payments and returns), 8971, 990-T, and estimated tax payments.  The relief includes not just the specified forms, but also all schedules, returns, and other forms filed as attachments, such as schedule H, schedule SE, and Forms 3520, 5471, 5472, 8621, 8858, 8865, and 8938.
 

Overview of Extensions Granted in Notice 2020-23
 Type of Tax ReturnForm 12020 Deadline
 Individual/Married Tax Return &   Payments Form 1040, 1040-SR, 1040-NR, 1040-NR- EZ,
 1040-PR, 1040-SS		7/15/2020
 Trust & Estate Tax Return & Payment Form 1041, 1041-N, 1041-QFT7/15/2020
 Partnership Returns Form 1065; Form 10667/15/2020
 Corporation Tax Return & Payments Form 1120, 1120-C, 1120-F, 1120-FSC,
 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-
 POL, 1120-REIT, 1120-RIC, 1120-S, 1120-SF		7/15/2020
 United States Estate and
 Generation-Skipping Transfer Tax   Return & Payment		 Form 706; 706-NA, 706-A, 706-QDT, 706-   GS(T), 706-GS(D), 706-GS(D-1)7/15/2020
 Form 706 Pursuant to Rev. Proc.   2017-34 Form 7067/15/2020
 Information Regarding Beneficiaries   Acquiring Property from a Decedent Form 89717/15/2020
 United States Gift and Generation-   Skipping Transfer Tax Return and   Payment Form 7097/15/2020
 Exempt Organization Business   Income Tax Return & Payment  Form 990-T7/15/2020
 Excise Tax Payments on       Investment Income & Payment Form 990-PF; Form 47207/15/2020
 Quarterly Estimated Income Tax   Payments & Payments Form 990-W; Form 1040-ES; 1040-ES (NR),   1040-ES (PR); Form 1041-ES; Form 1120-W7/15/2020
 Return of Organization Exempt from   Income Tax 2 Form 9907/15/2020
 Annual Return/Report of Employee   Benefit Plan2 Form 55007/15/2020

1 – This relief includes not just the filing of specified Forms, but also all schedules, returns, and other forms that are filed as attachments to specified forms or are required to be filed by the due date of Specified Forms
2 – This relief comes through Rev. Proc. 2018-58 for affected taxpayers with a time sensitive act which is due to be performed on or after April 1, 2020.

NOTE: The above list is not intended to be all inclusive. Rev. Proc. 2018-58 provides other disaster-related relief for time-sensitive actions and elections. 

The period beginning on April 1, 2020, and ending on July 15, 2020, will be disregarded in the calculation for interest, penalty, or addition to tax for failure to file the forms or make payments that are temporarily postponed by Notice 2020-23. Such amounts will accrue starting on July 16, 2020.

IRS and PA Officially Extend Filing and Payment Deadlines to July 15

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Extension Updates:

IRS and PA Officially Extend Filing and Payment Deadlines to July 15

  • Federal Filing and Payment Extension Through July 15, 2020 – The automatic extension from April 15th to July 15th applies to individuals, corporations and trusts/estates, the first quarter 2020 estimate tax filing, and any associated tax payments. This new deadline allows for all taxpayers and businesses to have additional time to file and make payments without interest or penalties. See IRS notice with details here: https://www.irs.gov/newsroom/payment-deadline-extended-to-july-15-2020
  • Pennsylvania Extends Personal Income Tax Return Filing Deadline to July 15, 2020 – The Department of Revenue today announced the deadline for taxpayers to file their 2019 Pennsylvania personal income tax returns is extended to July 15, 2020. This means taxpayers will have an additional 90 days to file from the original deadline of April 15. The Department of Revenue will also waive penalties and interest on 2019 personal income tax payments through the new deadline of July 15, 2020. This extension applies to both final 2019 tax returns and payments, and estimated payments for the first and second quarters of 2020. See PA announcement with precise detail here: https://www.media.pa.gov/Pages/Revenue-Details.aspx?newsid=307
  • Other State and Local Tax Deadline Extensions Have NOT Been Finalized.  Our team is monitoring this evolving situation as well as developments from all agencies around economic stimulus proposals.  We will distribute updates and details as they become available. For the most recent updates, please check our website: https://www.urishpopeck.com/news/
  • Office Update – We are continuing to operate our practice remotely. Moving forward, all processing of tax returns will be completed and distributed electronically whenever possible.  We will utilize our secure data website (www.securetaxdata.com) to deliver PDF copies of completed tax returns and ask that you use this same website to upload and transmit documents to us whenever possible.  Documents requiring signatures will be provided via email, utilizing e-signature applications. We strongly encourage the electronic transmission of information.  We are still accepting paper copies of documents, but due to mail delivery changes and potential delays, we cannot ensure timely access to the information.  If other arrangements need to be made, please contact your engagement professional directly.