Extension of Tax-Related Deadlines Includes ESOP Provisions

On April 10, 2020, the IRS issued Notice 2020-23. This guidance—citing IRS Revenue Procedure 2018-58—identified a number of time-sensitive tax-related actions whose completion can be delayed to July 15, 2020, as a result of disruptions caused by the coronavirus (COVID-19) pandemic.

For the identified actions, a deadline falling on or after April 1, 2020, and before July 15, 2020, is extended to July 15, 2020. This also applies to the following employee stock ownership plan (ESOP) actions.

• Distribute C Corp stock dividends made to the plan within the time period required to qualify for deductibility under Internal Revenue Code Section (IRC Sec.) 404(k)
• Provide or exercise put options on employer stock distributed from the ESOP
• Repurchase of employer stock after a total distribution
• Repurchase of employer stock after installment distributions
• Commence distributions within the maximum timeframes allowed under IRC Sec. 409(o)
• Purchase qualified replacement property to avoid taxable sale of employer stock to an ESOP

Most of the other deadline extensions provided by Notice 2020-23 were described in a previous Industry & Regulatory News posting.