COVID filing postponement did not extend the refund lookback period

Plain-English summary

Notice 2020-23 postponed the deadline for filing a 2019 federal income tax return until July 15, 2020. It did not change the rule that 2019 withholding and estimated taxes were deemed paid on April 15, 2020. Counsel explained that a taxpayer who filed on July 15 could generally file a refund claim as late as July 17, 2023 under IRC § 6511(a), but the three-year lookback rule in § 6511(b)(2)(A) could still bar recovery of those April 2020 payments. The Notice created a postponement under § 7508A, not an extension that would enlarge the lookback period. A calendar-year taxpayer seeking a refund of 2019 withholding or estimated taxes therefore generally needed to file the claim by April 17, 2023. Counsel distinguished a taxpayer who had requested an extension before filing on July 15, because that extension period would count under the lookback rule.

Ruling snapshot

• Question: Did Notice 2020-23's postponed filing date also extend the three-year lookback period for refunding 2019 withholding or estimated tax?
• Outcome: Advice given: no, the postponement was not an extension for IRC § 6511(b)(2)(A)
• Key authorities: IRC § 6511(a), § 6511(b)(2)(A), § 6513(b), § 7503, § 7508A; Notice 2020-23

Full text (IRS public release)

ID: CCA_2020092514215240
UILC: [7508A.00-00, 6511.00-00]

Number: 202053013
Release Date: 12/31/2020
From: ---------------------
Sent: Friday, September 25, 2020 2:21:52 PM
To: ----------------
Cc: ---------------------------------------------
Bcc:
Subject: interaction of section 7508A and section 6511(b)(2)(A) - follow-up from 9/24 RATA class

Hi --------. We wanted to follow-up on a question raised during the class
yesterday. Someone asked how section 7508A works in the context of the 3-year
lookback period of IRC § 6511(b)(2)(A), and we wanted to be sure everyone had the
relevant analysis. Pursuant to Notice 2020-23, taxpayers had until July 15, 2020 to file
their 2019 returns. Notice 2020-23 did not affect the date on which any withheld tax or
estimated tax for 2019 is deemed paid. So any withheld tax or estimated tax for 2019 is
deemed paid on April 15, 2020 for calendar year taxpayers. See IRC § 6513(b)(1)
(withheld tax) and IRC § 6513(b)(2) (estimated tax). Under IRC § 6511(a), a taxpayer
would have 3 years from the filing of the 2019 return to claim a refund. So suppose a
taxpayer files the 2019 return pursuant to Notice 2020-23 on July 15, 2020. The
taxpayer would have until July 17, 2023 (3 years would be July 15, but that is a
Saturday, so under IRC § 7503, the taxpayer would have until Monday July 17) to file a
timely claim for refund. Yet IRC § 6511(b)(2)(A) limits any refund to amounts paid within
the 3 years prior to the filing of the claim plus any period of extension (the 3-year
lookback period). Unfortunately, the additional time prescribed by Notice 2020-23 is not
an “extension” within the meaning of the 3-year lookback period. Thus, if the taxpayer is
trying to claim a refund of estimated tax or withheld tax for 2019, the taxpayer cannot
wait until July 17, 2023 to file a claim, as those payments would be outside the 3-year
lookback period. Instead, the taxpayer must file a claim for refund on or before April 17,
2023. (3 years from April 15, 2020 would be April 15, 2023, but that is a Saturday, so
under IRC § 7503, the taxpayer would have until Monday April 17). (If, however, the
taxpayer had filed an extension request and then filed on July 15, 2020, the taxpayer
would have until July 17, 2023 to claim a refund of estimated tax or withheld tax, as then
the payments would have been made within the period of extension). We recognize this
is a harsh result for many taxpayers, but section 7508A operates as a “postponement”
not an “extension.”

Would you mind distributing to the RATAs and then if anyone has further questions
please let us know? Thanks so much.

------------------------------------------------------------------------------------------------------------------------------------------

----------------------------------------------------