IRS Notice 2023-21: Relief for Filing Amended 2019 and 2020 Federal Tax Returns
The Internal Revenue Service (IRS) recently released Notice 2023-21 clarifying how the postponed tax return filing deadlines in 2020 and 2021 affect amended return filings.
In April 2020, the IRS issued Notice 2020-23, which postponed certain 2019 federal tax return filing and payment deadlines until July 15, 2020. Similarly, in April 2021, the IRS published Notice 2021-21, which postponed certain 2020 federal tax return filing and payment deadlines to May 17, 2022.
These postponements were explicitly not extensions, meaning that while the due dates were pushed back, they were not changed for other purposes, such as filing refund claims.
The normal refund statute requires a taxpayer to file an amended return within three years from the time the original return was filed. The statute then provides that the taxpayer is entitled to a refund of amounts paid during the three years preceding the date the amended return is filed. If the taxpayer filed an extension of time to file their original return, the look-back period for amounts paid is expanded to include amounts paid within three years and six months. The three years or three years and six months look-back period for payments is not usually an issue for taxpayers, since estimated tax payments and credits from prior years are deemed paid on the original due date of the return (e.g., April 15 for individual returns).
For example, assume a taxpayer files a 2022 return on April 18, 2023. An amended 2022 return filed on April 15, 2026, would look back three years to April 15, 2023, and incorporate the withheld tax and estimated tax payments deemed paid on April 18, 2023 – within the three-year period.
Unfortunately, Notices 2020-23 and 2021-21 provided only postponements, not extensions of the tax filing due dates. Taxpayers that filed a return on the postponed due date of July 15, 2020, and then file an amended return on July 15, 2023, would only be entitled a refund of amounts paid during that time. This three-year window would exclude the withheld taxes and estimated tax payments deemed paid three months earlier on April 15, 2020. This is an unexpected result for taxpayers, and many tax professionals and organizations pressed the IRS for relief on this issue.
IRS Notice 2023-21 addressed this issue for taxpayers that had a return filing due date postponed by Notices 2020-23 or 2021-21, and did not receive an extension of time to file that return under the normal extension procedures. The period between April 15, 2020, and July 15, 2020, and the period between April 15, 2021, and May 17, 2021, will be disregarded for purposes of the refund lookback period.
The relief provided in Notice 2023-21 is automatic; taxpayers do not need to do anything to qualify for it. The tax payments deemed to be made on April 15 of 2020 or 2021 will be pulled into the three-year window for amended returns filed no later than July 15, 2023, or May 17, 2024, respectively.
The issue of postponed tax filing dates and the look-back period for amounts paid is not limited to postponements during the COVID-19 pandemic. In 2022 and 2023, the IRS has issued multiple notices postponing tax filing deadlines for taxpayers located in areas impacted by floods, storms, tornados, fires and other natural disasters.
Questions? Cherry Bekaert Can Help
If you have questions regarding statute rules for filing refund claims, reach out to your Cherry Bekaert tax advisor.
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