IRS Clarifies Its Partial Extension of April 15 Due Date

On Monday, March 29, the IRS issued Notice 2021-21 to provide additional guidance on its announcement of an extension from April 15 to May 17 of some, but not all, tax returns due for the 2020 calendar year. We wrote about this earlier announcement here.

This extension is much more limited than last year’s blanket extension of dozens of due dates until July 15, 2020. Notice 2021-21 clarifies that the due dates for the following are extended from April 15, 2021 until May 17, 2021:

  • Filing of 2020 individual tax returns, and all schedules and forms that are attached to these returns (for example, Schedule H for household employees)
  • Filing of 2020 individual extensions
  • Payment of tax due in connection with 2020 individual tax returns or extensions
  • 2020 contributions to individual retirement arrangements (IRAs and Roth IRAs), health savings accounts (HSAs), Archer Medical Savings Accounts (Archer MSAs), and Coverdell education savings accounts (Coverdell ESAs)

The extension also applies to claims for certain claims for refunds to individuals that would otherwise expire on April 15, 2021. This affects primarily 2017 individual tax returns.

The extension does not apply beyond these somewhat narrow terms. Therefore, the following forms are still due on April 15, 2021:

  • Tax returns other than individual tax returns, for example returns for trusts or corporations with year ends of December 31, 2020
  • First quarter 2021 estimated tax payments for individuals

Observation: For individuals filing extensions, it long has been common and proper to include in that extension payment an increased amount designed to cover the first quarter estimated tax payment for the following year, which normally is due on the same date. (That excess is treated as an overpayment of tax in one year that will be applied to the following year instead of refunded.) By altering the extension date but not the estimated tax date, the IRS has created a disconnect, because without further guidance we must assume that any first quarter estimate component of a combined payment will be treated as paid a month late if deposited on May 17 rather than April 15.

It is important to note that this guidance applies only to federal returns. Many states (for example, Maine and Massachusetts) have enacted their own extensions until May 17 of the due dates for individual tax returns. Others, however, including New Hampshire, have not gone along with the federal extension. The due date for filing 2020 New Hampshire Interest and Dividends Tax returns is still April 15, 2021.

For more information, please contact your BNN tax service provider at 800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.