Twelve days after announcing the agency planned to push back the April 15 filing deadline for calendar year 2020 Forms 1040 to May 17, the IRS made it official in IRS News Release IR-2021-67[1] and Notice 2021-21.[2]

Use of §7508A to Extend Time

As most had suspected, the IRS again turned to IRC §7508A, the same provision used one year ago, to extend due dates, but this time doing so in a much more limited fashion than was used for 2019 returns.

In 2019 all returns due during the period of relief, and a number of other required actions, were delayed by the ruling. This time the IRS much more narrowly defines the taxpayers affected by the COVID-19 emergency, covering those filing 1040 series forms on April 15, 2021 and a limited number of other filings:

The Secretary has determined that any person with a Federal income tax return filed on Form 1040, Form 1040-SR, Form 1040-NR, Form 1040-PR, Form 1040-SS, or Form 1040(SP) (Form 1040 series), or a Federal income tax payment reported on one of these forms, that absent this notice would be due April 15, 2021, is affected by the COVID-19 emergency for purposes of the relief described in this section III (Affected Taxpayer). In addition, persons who are required to file and furnish Form 5498, IRA Contribution Information, Form 5498-ESA, Coverdell ESA Contribution Information, and Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information (Form 5498 series) that absent this notice would generally be due June 1, 2021, are Affected Taxpayers.[3]

The use of IRC §7508A to provide the extension triggers a provision in the American Rescue Plan Act of 2021. The Act added IRC §6428B to provide for 2021 recovery rebates and advance payments of the same. At IRC §6428B(5)(B) the act provides that a taxpayer that was paid an advance payment on the 2021 recovery rebate based on the taxpayer’s 2019 return can qualify for an additional payment that the taxpayer would have qualified for based on the 2020 return if that return is processed by the IRS by a date that is no more than 90 days after the calendar year 2020 filing deadline, taking into account any extensions of that date granted under IRC §7508A.

Thus, 2020 returns processed by the IRS through August 15, 2021 that are from taxpayers that had their initial 2021 recovery rebate computed based on 2019 numbers will now be considered by the IRS to see if the taxpayer qualifies for a larger advance payment.

Claims for Refunds

The Notice also provides relief for expiring time periods to file a claim for refund or credit, creating another class of Affected Taxpayers:

The Secretary has also determined that any individual with a period of limitations to file a claim for credit or refund of Federal income tax that absent this notice would expire on or after April 15, 2021, and before May 17, 2021 (for example, certain individual taxpayers with claims for credit or refund in respect of their 2017 taxable years), is an Affected Taxpayer.[4]

General Delay to May 17

The Notice provides the following general relief for the filing of Forms 1040 and a limited set of other forms due on April 15, 2021:

For an Affected Taxpayer, the due date for filing Federal income tax returns in the Form 1040 series and making Federal income tax payments in connection with one of these forms having an original due date of April 15, 2021, is automatically postponed to May 17, 2021. Affected Taxpayers do not have to file any form, including Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, to obtain this relief. This relief includes the filing of all schedules, returns, and other forms that are filed as attachments to the Form 1040 series or are required to be filed by the due date of the Form 1040 series, including, for example, Schedule H and Schedule SE, as well as Forms 965-A, 3520, 5329, 5471, 8621, 8858, 8865, 8915-E, and 8938. Finally, elections that are made or required to be made on a timely filed Form 1040 series (or attachment to such form) will be timely made if filed on such form or attachment, as appropriate, on or before May 17, 2021.[5]

The Notice provides that interest and penalties will also not apply for that period of time for Affected Taxpayers:

As a result of the postponement of the due date for Affected Taxpayers to file Federal income tax returns and make Federal income tax payments from April 15, 2021, to May 17, 2021, the period beginning on April 15, 2021, and ending on May 17, 2021, will be disregarded in the calculation of any interest, penalty, or addition to tax for failure to file the Federal income tax returns or to pay the Federal income taxes postponed by this notice. Interest, penalties, and additions to tax with respect to such postponed Federal income tax filings and payments will begin to accrue on May 18, 2021.[6]

2020 IRA, HSA, MSA and ESA Contributions

The Notice also provides that contributions to IRAs, HSAs, MSAs, and ESAs for 2020 which normally would have been required to be made no later than April 15, 2021 will now be allowed to be made through May 17, 2021:

The postponement of the due date for filing these Federal income tax returns to May 17, 2021, also automatically postpones to the same date the time for Affected Taxpayers to make 2020 contributions to their individual retirement arrangements (IRAs and Roth IRAs), health savings accounts (HSAs), Archer Medical Savings Accounts (Archer MSAs), and Coverdell education savings accounts (Coverdell ESAs).[7]

Due Date for Tax on Premature Distributions Under IRC §72

The Notice also clarifies that the additional tax imposed by IRC §72 on premature distributions from retirement plans will also not be due until May 17, 2021:

This postponement also automatically postpones to May 17, 2021, the time for reporting and payment of the 10-percent additional tax on amounts includible in gross income from 2020 distributions from IRAs or workplace-based retirement plans.[8]

Delay in Date for Filing Form 5498 Series Forms

A slightly different delay is provided for those filing Form 5498, pushing the due date back to June 30, 2021:

Forms in the Form 5498 series must be filed with the IRS and furnished to participants and beneficiaries by the due date specified in General Instructions for Certain Information Returns (Forms 1096, 1097, 1098, 1099, 3921, 3922, 5498, and W2G). Because filers of Form 5498 series are Affected Taxpayers, the due date for filing and furnishing the Form 5498 series is postponed to June 30, 2021. The period beginning on the original due date of those forms and ending on June 30, 2021, will be disregarded in the calculation of any penalty for failure to file those forms. Penalties with respect to such a postponed filing will begin to accrue on July 1, 2021.[9]

Items Not Receiving Relief

The IRS makes clear in Notice 2021-21 that this year the relief is much more limited than last year’s broad grant of relief. The Notice provides:

Businesses and any other type of taxpayer who file Federal income tax returns on forms outside of the Form 1040 series are not Affected Taxpayers for purposes of the relief described in this section III.B.

No extension is provided in this notice for the payment or deposit of any other type of Federal tax, including Federal estimated income tax payments, or for the filing of any Federal return other than the Form 1040 series and the Form 5498 series for the 2020 taxable year.[10]

Thus, still due on April 15, 2021 are, among other forms:

First quarter individual estimated income tax payments;
Trust and estate income tax returns (calendar year); and
C corporation tax returns (calendar year).

In the accompanying News Release, the IRS puts an emphasis on the requirement for individuals to file first quarter estimated tax payments by April 15:

Estimated tax payment due April 15

Notice 2021-21, issued today does not alter the April 15, 2021, deadline for estimated tax payments; these payments are still due on April 15. Taxes must be paid as taxpayers earn or receive income during the year, either through withholding or estimated tax payments. In general, estimated tax payments are made quarterly to the IRS by people whose income isn't subject to income tax withholding, including self-employment income, interest, dividends, alimony or rental income. Most taxpayers automatically have their taxes withheld from their paychecks and submitted to the IRS by their employer.[11]

Claims for Refund

The Notice also provides relief for 1040 related claims for refund, essentially making any claim whose last date for filing the claim falls between April 15, 2021 and May 16, 2021 timely filed so long as it is filed by May 17, 2021:

Individuals with a period of limitations to file a claim for credit or refund of Federal income tax expiring on or after April 15, 2021, and before May 17, 2021, have until May 17, 2021, to file those claims for credit or refund. This postponement is limited to claims for credit or refund properly filed on the Form 1040 series or on a Form 1040-X.

As a result of the postponement of the time for individuals to file claims for credit or refund of Federal income tax where the period to file that claim expires on or after April 15, 2021, and before May 17, 2021, the period beginning on April 15, 2021, and ending on May 17, 2021, will be disregarded in determining whether the filing of those claims is timely.[12]

[1] “IRS extends additional tax deadlines for individuals to May 17,” IRS News Release IR-2021-67, March 29, 2021 (https://www.irs.gov/newsroom/irs-extends-additional-tax-deadlines-for-individuals-to-may-17, retrieved March 29, 2021)

[2] Notice 2021-21, March 29, 2021, (https://www.irs.gov/pub/irs-drop/n-21-21.pdf, retrieved March 29, 2021)

[3] Notice 2021-21, March 29, 2021, Section III.A

[4] Notice 2021-21, March 29, 2021, Section III.A

[5] Notice 2021-21, March 29, 2021, Section III.B

[6] Notice 2021-21, March 29, 2021, Section III.B

[7] Notice 2021-21, March 29, 2021, Section III.B

[8] Notice 2021-21, March 29, 2021, Section III.B

[9] Notice 2021-21, March 29, 2021, Section III.B

[10] Notice 2021-21, March 29, 2021, Section III.B

[11] “IRS extends additional tax deadlines for individuals to May 17,” IRS News Release IR-2021-67, March 29, 2021

[12] Notice 2021-21, March 29, 2021, Section III.C