Filing Deadlines Extensions

• DOI: http://doi.org/10.1002/npc.30727
• Date: 01 June 2020
• Published date: 01 June 2020

Bruce R. Hopkins’ NONPROFIT COUNSEL

June 2020 3

THE LAW OF TAX-EXEMP T ORGANIZATIONS MONTHLY

Bruce R. Hopkins’ Nonpr ofit Counsel DOI:10.10 02/n pc

between 500 and 10,000 employees, not to exceed

$500 billion (Act § 4003). This is to be done to provide

liquidity to businesses related to losses incurred as a

result of COVID-19. An eligible business is a US business,

including “nonprofit organizations,” that “has not oth-

erwise received adequate economic relief in the form of

loans or loan guarantees” provided in the CARES Act.

Health Care System Support

Title III of the act entails provisions in support of the

nation’s health care system, collectively the Coronavirus

Aid, Relief and Economic Security Act. This body of

law includes (1) mandate of a report by the National

Academies of Sciences, Engineering, and Medicine on

the security of the US medical product supply chain (Act

§ 3101); (2) law revisions designed to prevent medical

device shortages (Act § 3121); (3) authorization of

grants to advance telehealth networking (Act §§ 3212,

3213); and (4) a directive for development of a compre-

hensive and coordinated plan with respect to the health

care workforce development programs of the Depart-

ment of Health and Human Services, including education

and training programs (Act § 3402).

Net Operating Losses

The net operating loss law is amended to provide

an extended carry-back rule in the form of a five-year

carryback period for NOLs arising in 2018–2020. More-

over, the 80-percent-of-taxable-income limitation on the

use of NOLs, imposed in 2017, has been suspended for

tax years beginning before January 1, 2021. These law

changes, pertinent to the calculation of unrelated busi-

ness taxable income, are designed to create liquidity in

the form of tax refunds (Act §§ 2303, 2305).

Claims allowed pursuant to these temporary law

changes are made on Form 1139 or 1045. Starting

April 17, and until further notice, these claims are to be

submitted via fax. This temporary process is designed to

generate refunds as soon as possible.

Federal Reserve Initiatives

The Federal Reserve, on April 9, acted to provide up to

$2.3 trillion in loans to support the economy. These actions

are intended to bolster the effectiveness of the Paycheck

Protection Program by supplying liquidity to financial insti-

tutions through term financing. A Paycheck Protection Pro-

gram Liquidity Facility will extend credit to institutions that

originate PPP loans, taking the loans as collateral.

The Fed will also ensure that credit flows to small and

midsized businesses with the purchase of up to $600 bil-

lion in loans through the Main Street Lending Program.

The Treasury Department is proving $75 billion in equity

to the facility.

This program is designed to facilitate lending to US

businesses with no more than 10,000 employees or less

than $2.5 billion in 2019 revenue. These four-year loans will

be at least $1 million in amount and may be as much as

$25 million. Principal and interest payments will be deferred

for one year. Businesses seeking these loans must commit

to make reasonable efforts to maintain payroll and retain

workers. Entities that have taken advantage of the PPP may

also take out Main Street loans.

Governance

The act creates a Congressional Oversight Com-

mission, with the responsibility to conduct oversight of

implementation of this law, including efforts to provide

economic stability (Act § 4020).

The act also establishes within the Department of

the Treasury the Office of the Special Inspector General

for Pandemic Recovery (Act § 4018). The duties of this

office include the conduct, supervision, and coordination

of investigations of the making of loans, loan guaran-

tees, and other investments by the Treasury Department

under Act programs.

The act further established a Pandemic Response

Accountability Committee, which is to conduct oversight

of CARES Act funding (§ 15010(b) of Division B of the

act). Members of this committee include various inspec-

tors general of the federal government.

In the signing statement accompanying the CARES Act,

President Trump observed that the act includes “several

provisions that raise constitutional concerns.” He objected,

for example, to provisions that require executive branch

employees to consult with members of Congress regarding

hiring decisions as being violative of separation-of-powers

principles. These provisions are regarded by the administra-

tion as “hortatory but not mandatory.” ◆

FILING DEADLINES

EXTENSIONS

The IRS extended the filing deadline of April 15 in

connection with individuals’ and for-profit corporations’

income tax returns to July 15 (Notice 2020-17). This

extension, however, does not apply to other types of tax-

payers and other categories of taxes. This state of affairs

was thereafter reiterated, except for circumstances

where a Form 990-T, 990-PF, or 4720 was due to be filed

on April 15 (Notice 2020-18).

A clamor quickly ensued for a similar extension of

time with respect to the Form 990 series of returns

in general. In response, the IRS issued a fourth notice

(Notice 2020-23), amplifying a third notice (Notice 2020-

20), extending 990 series relief, as to the July 15 date.

The latest of these notices references Rev. Proc.

2018-58, which in turn characterizes tax-exempt organ-

izations as “affected taxpayers.” This, in turn, causes

these filings to be “time-sensitive actions” warranting

the extension. [28.2(a)(iv)] ◆