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IRS Extension of Tax Filing and Payment Deadlines

On March 13, 2020, the President of the United States issued an emergency declaration under the Robert T. Stafford Disaster Relief and Emergency Assistance Act in response to the ongoing coronavirus disease 2019 (COVID-19) pandemic. Section 7508A of the Internal Revenue Code of 1986 (Code), as amended, provides the Secretary of the Treasury with the authority to postpone taxpayer filing and payment deadlines in connection with a federally-declared disaster. The Code allows a period of up to one year to be disregarded in determining whether the performance of certain acts is timely under the Code. The Internal Revenue Service (IRS) issued Notice 2020-18, which delayed the April 15, 2020, federal income tax filing and payment deadline for calendar year 2019 until July 15, 2020. The IRS recently issued IRS Notice 2020-23, which amplifies the individual taxpayer relief previously issued in IRS Notice 2020-18.

Employee Benefit Plans

Section 104 of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, requires that Form 5500, Annual Return/Report of Employee Benefit Plan, be filed with the Department of Labor (DOL) and the IRS no later than the last day of the seventh month after the plan year ends (July 31 for a calendar year plan). Notice 2020-23 has extended the Form 5500 filing deadline until July 15, 2020, for filings otherwise required to be made between April 1, 2020, and July 14, 2020, including those filings with deadlines falling within those dates due to a plan administrator’s request for a filing extension on IRS Form 5558, Application of Extension of Time to File Certain Employee Plan Returns.

Form 5558 allows plan sponsors to request a one-time extension to delay the filing of Form 5500, which is automatically granted if filed before the due date of Form 5500 and provides a two-and-one-half month period in which to file the return. The immediate relief provided by Notice 2020-23 does not extend to calendar year 2019 Form 5500 filings originally due July 31, 2020.

Under Notice 2020-23, Section 125 cafeteria plan initial and open enrollment periods that end on or after April 1, 2020, and before July 15, 2020, must be extended to July 15, 2020, even if the plan year begins before July 15, 2020. Also, health flexible spending account (FSA) amounts must not be subject to forfeiture on or after April 1, 2020, and before July 15, 2020. If a cafeteria plan allows the purchase of additional vacation days, any unused elective vacation days must be cashed out by the end of the year. However, under Notice 2020-23, a plan must allow cash out of the unused days by July 15, 2020, for plan years ending on or after April 1, 2020 and before July 15, 2020.