Practice Management
While there's still no Form 5500 filing relief, Notice 2020-35, issued May 28, provides additional administrative relief regarding deadlines applicable to employment taxes, employee benefits and exempt organizations affected by the pandemic.
Under Code Section 7508A, the IRS is postponing deadlines for certain time-sensitive actions due to the pandemic. This concerns the following for which, with certain exceptions, actions are due to be performed on or after March 30, 2020, and before July 15, 2020:
Under Code Section 7508A, the IRS is postponing deadlines for certain time-sensitive actions due to the pandemic. This concerns the following for which, with certain exceptions, actions are due to be performed on or after March 30, 2020, and before July 15, 2020:
- certain employment taxes;
- employee benefit plans;
- IRAs;
- health savings accounts (HSAs);
- Coverdell education savings accounts;
- Archer and Medicare Advantage medical saving accounts (MSAs); and
- exempt organizations.
The IRS also is providing a temporary waiver of the requirement that Certified Professional Employer Organizations (CPEOs) file certain employment tax returns and their accompanying schedules on magnetic media.
Affected Taxpayers
Notice 2020-35 amplifies the definition of “affected taxpayer” as provided in Notice 2020-23 to include a variety of taxpayers concerning performance of time-sensitive actions as defined by Notice 2020-32 that are due to be performed on or after March 30, 2020, and before July 15, 2020, concerning:
- employment taxes;
- employee benefit plans, when the plan—including a 403(b) plan, a governmental 457(b) plan, a SEP or a SIMPLE IRA—or any sponsor, administrator, participant, beneficiary, disqualified person or other person performs a time-sensitive action regarding such a plan;
- exempt organizations; and
- Forms 5498, 5498-SA or 5498-ESA.
Time-Sensitive Actions
Notice 2020-32 amplifies the definition of specified time-sensitive actions as provided in Notice 2020-23 to include a variety of actions that are due to be performed on or after March 30, 2020, and before July 15, 2020. Under this notice, the revised deadline for an affected taxpayer to perform one of these functions is July 15, 2020, except as otherwise specified.
The time-sensitive actions to which the relief Notice 2020-32 provides applies are:
1. Actions to correct employment tax reporting errors using the interest-free adjustment process under Code Sections 6205 and 6413.
2. Applications for a funding waiver under Code Section 412(c) for a defined benefit plan that is not a multiemployer plan.
3. Regarding a multiemployer DB plan, actions due to be performed on or before the dates described in Code Sections 432(b)(3), 432(c)(1), 432(e)(1), 432(c)(6) and 432(e)(3).
4. Regarding a CSEC plan, actions to be performed on or before the date described in Code Sections 433(c)(9) , 433(f)(3)(B), Section 433(j)(3) and Section 433(j)(4).
5. Filing Form 5330 and payment of the associated excise taxes.
6. Extension of the initial remedial amendment period for 403(b)s.
7. Regarding pre-approved DB plans, the deadline for the following actions is postponed until July 31, 2020:
- adoption of a pre-approved DB plan that was approved based on the 2012 Cumulative List;
- submission of a determination letter application under the second six-year remedial amendment cycle; and
- actions that are otherwise required to be performed with respect to disqualifying provisions during the remedial amendment period that would otherwise end on April 30, 2020.
8. Regarding the IRS Employee Plans Compliance Resolution System (EPCRS) and a compliance statement issued under VCP, implementation of all corrective actions, including adoption of corrective amendments required by the compliance statement.
9. Requests for approval of a substitute mortality table in accordance with Code Section 430(h)(3)(C).
10. Regarding Forms 5498, 5498ESA and 5498-SA, the due date for filing and furnishing the forms is postponed to August 31, 2020. The period beginning on the original due date of those forms and ending on August 31, 2020, will be disregarded in the calculation of any penalty for failure to file those forms. Penalties regarding such a postponed filing will begin to accrue on Sept. 1, 2020.
In addition, the notice says, in the case of time-sensitive actions regarding provisions of the Internal Revenue Code for which there are parallel provisions in ERISA, the relief Notice 2020-32 provides also applies for purposes of those provisions under ERISA.
Certified Professional Employer Organizations
Notice 2020-32 provides a temporary waiver for all CPEOs of the requirement that CPEOs file certain employment tax returns, and their accompanying schedules, on magnetic media (including electronic filing). The waiver applies only to:
- Forms 941 filed for the second, third, and fourth quarter of 2020;
- Forms 943 filed for calendar year 2020; and
- their accompanying schedules.
Accordingly, CPEOs are permitted, but not required, to file a paper Form 941, and its accompanying schedules, in lieu of electronic submission for the second, third, and fourth quarters of calendar year 2020. In addition, CPEOs are permitted, but not required, to file a paper Form 943, and its accompanying schedules, in lieu of electronic submission for calendar year 2020.
Internal Revenue Bulletin
Notice 2020-35 will be published in Internal Revenue Bulletin 2020-25 on June 15, 2020.
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