When a taxpayer files a claim within three years of filing the tax return, the lookback period is equal to three years plus the period of any extension of time for filing the return. Otherwise, the lookback period is two years.
For a calendar-year taxpayer, withheld and estimated income taxes are deemed paid on the due date of the tax return. Thus for example, withheld and estimated taxes for the 2019 calendar-year are deemed to have been paid on April 15, 2020, the due date for filing the 2019 tax return. If a taxpayer filed for an extension for his or her 2019 tax return, the lookback period is three years from October 15, 2020, the due date for filing the 2019 tax return on extension. A taxpayer thus would have until April 15, 2023, or October 15, 2023 to file for a claim for credit or refund of taxes withheld or paid through estimates for the 2019 tax return, depending on whether or not an extension was filed.
On March 13, 2020, the President of the United States issued an emergency declaration in response to the ongoing COVID-19 pandemic. As a result, the IRS postponed certain federal tax return filing and payment obligations that were due to be performed on or after April 1, 2020, and before July 15, 2020, to July 15, 2020. (Notice 2020-23)
Similarly, Notice 2021-21 postponed the due date for both filing federal income tax returns in the Form 1040 series with an original due date of April 15, 2021, and making federal income tax payments in connection with one of these forms, to May 17, 2021.
Taxpayers who timely filed their tax returns by the postponed due dates provided in Notice 2020-23 and Notice 2021-21 have three years from the date of filing their return for each year to timely file a claim for credit or refund for that year.
Although these two notices postponed certain return filing due dates, those notices did not extend the time for filing the returns because a postponement is not an extension. As a result, the postponements did not lengthen the lookback periods under IRC section 6511(b)(2)(A) for taxpayers who otherwise did not file for an extension. Accordingly, absent the relief granted in Notice 2023-21, taxpayers who did not file for an extension of time for filing a return must file a claim for credit or refund by April 15, 2023 (for 2019 tax returns) or April 15, 2024 (for 2020 tax returns).
The IRS has determined that affected taxpayers with a due date postponed by Notice 2020-23 or Notice 2021-21 should be granted relief in the form of disregarding the beginning lookback period relating to the tax for which the return filing or payment due date was postponed.
Example: Jared is a calendar-year filer with a 2019 federal income tax return due date of April 15, 2020. He did not file for an extension of time to file his 2019 tax return. Jared’s employer withheld income taxes from his wages throughout 2019. These withheld income taxes are deemed paid on April 15, 2020. The due date for filing his Form 1040 was postponed by Notice 2020-23 to July 15, 2020. As a result, Jared timely filed his 2019 Form 1040 on June 22, 2020. Under the relief granted by Notice 2023-21, Jared now has until June 22, 2023 to file a claim for credit or refund of his withheld income taxes that are deemed paid on April 15, 2020.
Similar relief is granted for tax return filing due dates postponed by Notice 2021-21.
The relief provided for in Notice 2023-21 is automatic. Affected taxpayers do not have to call the IRS, file any form, or send letters or other documents to receive this relief.
