Treasury Amps Up the Relief in Notice 2020-20 for Gift and GST Taxes

On Friday, March 27, 2020, the U.S. Department of the Treasury issued Notice 2020-20, which postpones the filing and payment deadline for any taxpayer who is required to file Form 709 (U.S. Gift and Generation-Skipping Transfer Tax Return) or who has Federal gift or generation-skipping transfer tax payments due on April 15, 2020. Similar to the automatic extension provided in Notice 2020-18, Notice 2020-20 automatically postpones the due date for filing Form 709 and for making payments of Federal gift and generation-skipping transfer tax for any such taxpayer until July 15, 2020.

Amplification of Relief Granted in Notice 2020-18

This Notice supplements and amplifies the relief provided to taxpayers in Notice 2020-18, which specifically stated that it had no effect on information returns or tax payments arising from taxes derived from items other than income. Notice 2020-18 is discussed here. 

Notice Issued in Response to Emergency Determination

Notice 2020-20 was issued in response to the determination of President Trump, on March 13, 2020, that the COVID-19 pandemic is of sufficient severity and magnitude to warrant an emergency determination under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act. In the declaration of emergency, the President instructed Secretary Mnuchin to provide relief from tax deadlines to Americans who have been adversely affected by the COVID-19 emergency.

Applicable Filing and Payment Due Date

The Notice automatically postpones the due date for the filing of any required Federal gift and generation-skipping transfer tax returns and the payment of taxes associated with such returns otherwise due April 15 by 90 days, moving the date returns must be filed and payment must be made from April 15, 2020, to July 15, 2020. The Notice has no effect on any other tax returns or payments.

Calculation of Interest and Penalties

For amounts properly deferrable under the Notice, the period of April 15 through July 15, 2020, will be disregarded for the calculation of interest and penalties on unpaid taxes or for failure to file. For all such unpaid taxes, interest and penalties will begin to accrue as of July 16, 2020.

The Notice specifies that the period of April 15 through July 15, 2020, is only disregarded for purposes of calculating interest and penalties associated with “failure to file a Form 709 or to pay Federal gift and generation-skipping transfer taxes shown on that Form and postponed by this notice.” Accordingly, any currently overdue unpaid gift and generation-skipping transfer taxes will continue to accrue interest and penalties without suspension.

Only Applicable to “Required” Returns

The language of Notice 2020-20 states that the automatic extension is only applicable for taxpayers with a tax payment due or with a “requirement to file form 709.” There is some concern among practitioners that this extension may not cover all circumstances where it is otherwise beneficial to file a Form 709 by April 15. Accordingly, taxpayers should consult with their accountants and legal counsel to determine whether and how this Notice applies to their particular circumstances.

For more information regarding Notice 2020-20, Notice 2020-18, Federal or state tax return filing deadlines and further available extensions, or Federal or state tax payment deadlines, please contact Tony Frasca (734-214-7614 or afrasca@dykema.com), Michael Cumming (248-203-0740 or mcumming@dykema.com), Rob Tiplady (734-214-7644 or rtiplady@dykema.com), Tyler Kemper (734-214-7694 or tkemper@dykema.com), or your Dykema relationship attorney.

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