Coronavirus-Related Distributions and Plan Loan Guidance

The IRS has issued guidance on Coronavirus-related distributions and plan loans. The guidance presents the rules set out in Act Sec. 2202 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136). It adds three new categories to the list of individuals who qualify due to adverse financial consequences. It provides analysis and examples repayments reporting. The guidance includes safe harbors for employee certification and the plan loan payment suspension period.

 

Background: Coronavirus-Distributions and Plan Loan Relief

The CARES Act provides that qualified individuals may treat as coronavirus-related distributions up to $100,000 in distributions made from their eligible retirement plans (including IRAs) between January 1 and December 30, 2020. A coronavirus-related distribution is not subject to the 10 percent additional tax that otherwise generally applies to distributions made before an individual reaches age 59 ½. In addition, a coronavirus-related distribution can be included in income in equal installments over a three-year period, and an individual has three years to repay a coronavirus-related distribution to a plan or IRA and undo the tax consequences of the distribution.

In addition, the CARES Act provides that plans may implement certain relaxed rules for qualified individuals relating to plan loan amounts and repayment terms. In particular, plans may suspend loan repayments that are due from March 27 through December 31, 2020, and the dollar limit on loans made between March 27 and September 22, 2020, is raised from $50,000 to $100,000.

New Categories of Qualified Individuals

One of the categories of individuals who qualify for Coronavirus-related distributions are those who experience adverse financial consequences as a result of Coronavirus. As laid out in the CARES act, these consequences may include: being quarantined; being furloughed or laid off or having work hours reduced due to such virus or disease; being unable to work due to lack of child care due to such virus or disease; and closing or reducing hours of a business owned or operated by the individual due to such virus or disease.

The CARES Act authorizes the Treasury Department to add to this list of adverse financial consequences, the these are the new additions:


  • a reduction in pay (or self-employment income) due to COVID-19 or having a job offer rescinded or start date for a job delayed due to COVID-19;

  • the individual’s spouse or a member of the individual’s household being quarantined, being furloughed or laid off, or having work hours reduced due to COVID-19, being unable to work due to lack of childcare due to COVID-19, having a reduction in pay (or self-employment income) due to COVID-19, or having a job offer rescinded or start date for a job delayed due to COVID-19; or

  • closing or reducing hours of a business owned or operated by the individual’s spouse or a member of the individual’s household due to COVID-19.


For purposes of applying these additional factors, a member of the individual’s household is someone who shares the individual’s principal residence.

 

Recontributions for Taxpayers Recognizing Income in Year of Distribution

The new guidance goes into some detail about recontributions. Individuals have up to three years to recontribute qualified distributions. Recontributed dollars are not taxed, so earlier returns may have to be amended. The rules differ depending on whether the individual is recognizing income over three years or entirely in the year of distribution.

If a taxpayer includes all coronavirus-related distributions received in a year in gross income for that year and recontributes any portion during the three-year recontribution period, the amount of the recontribution will reduce the amount of the related distribution included in gross income for the year of the distribution.

Example 1. Taxpayer Bob receives a $45,000 coronavirus distribution from B’s employer plan on November 1, 2020. Bob recontributes $45,000 to an IRA on March 31, 2021. Bob reports the recontribution on Form 8915-E and files the 2020 federal income tax return on April 10, 2021. No portion of the coronavirus-related distribution is includible as income for the 2020 tax year.

Example 2.. The facts are the same as in Example 1, except that Bob timely requests an extension of time to file the 2020 federal income tax return and makes a recontribution on August 2, 2021, before filing the 2020 federal income tax return. Bob files the 2020 federal income tax return on August 10, 2021. As in Example 1, no portion of the coronavirus-related distribution is includible in income for the 2020 tax year because Bob made the recontribution before the timely filing of the 2020 federal income tax return. 

Example 3. Taxpayer Cynthia receives a $15,000 distribution from an employer plan on March 30, 2020. Cynthia elects out of the 3-year ratable income inclusion on Form 8915-E and includes the entire $15,000 in gross income for the 2020 tax year. On December 31, 2022, she recontributes $15,000 to her employer plan. Cynthia will need to file an amended federal income tax return for the 2020 tax year to report the amount of the recontribution and reduce the gross income by $15,000 with respect to the coronavirus-related distribution included on the 2020 original federal income tax return.

Recontributions for Taxpayers Recognizing Income Over Three Years

If a qualified individual includes a coronavirus-related distribution ratably over a three-year period and the individual recontributes any portion to an eligible retirement plan at any date before the timely filing of the individual’s federal income tax return (that is, by the due date, including extensions) for a tax year in the three-year period, the amount of the recontribution will reduce the ratable portion of the coronavirus-related distribution that is includible in gross income for that tax year.

Example 4. Taxpayer Dan receives $75,000 from his employer plan on December 1, 2020. Dan uses the three-year ratable income inclusion method. Dan makes one recontribution of $25,000 to the plan on April 10, 2022. Dan files his 2021 federal income tax return on April 15, 2022. Without the recontribution, Dan should include $25,000 in income with respect to the coronavirus-related distribution on each of Dan 2020, 2021, and 2022 federal income tax returns. However, as a result of the recontribution, Dan should include $25,000 in income with respect to the coronavirus-related distribution on the 2020 federal income tax return, $0 in income with respect to the coronavirus-related distribution on the 2021 federal income tax return, and $25,000 in income with respect to the coronavirus-related distribution on the 2022 federal income tax return.

Example 5. The facts are the same as in Example 4 except Dan recontributes $25,000 to the plan on August 10, 2022. Dan files the 2021 federal income tax return on April 15, 2022, and does not request an extension of time to file that federal income tax return. As a result of the recontribution, Dan should include $25,000 in income with respect to the coronavirus-related distribution on the 2020 federal income tax return, $25,000 in income with respect to the coronavirus-related distribution on the 2021 federal income tax return, and $0 in income with respect to the coronavirus-related distribution on the 2022 federal income tax return. 

Carryovers. If the taxpayer recontributes an amount for a tax year in the three-year period that exceeds the amount that is otherwise includible in gross income for that tax year, the excess amount of the recontribution may be carried forward to reduce the amount of the distribution includible in gross income in the next tax year in the three-year period. Alternatively, the qualified individual is permitted to carry back the excess amount of the recontribution to a prior taxable year or years in which the individual included income attributable to a coronavirus-related distribution. The individual will need to file an amended federal income tax return for the prior taxable year or years to report the amount of the recontribution on Form 8915-E and reduce his or her gross income by the excess amount of the recontribution.

Example 6. Taxpayer Eliza receives a distribution of $90,000 from her IRA on November 15, 2020. Eliza ratably includes the $90,000 distribution in income over a three-year period. Without any recontribution, Eliza will include $30,000 in income with respect to the coronavirus-related distribution on each of the 2020, 2021, and 2022 federal income tax returns. Eliza includes $30,000 in income with respect to the coronavirus-related distribution on the 2020 federal income tax return. Eliza then recontributes $40,000 to an IRA on November 10, 2021 (and makes no other recontribution in the three-year period). Eliza may do either of the following:

  • Option 1: includes $0 in income with respect to the coronavirus-related distribution on the 2021 federal income tax return, and carry forward the excess recontribution of $10,000 to 2022 and includes $20,000 in income with respect to the coronavirus-related distribution on Eliza’s 2022 federal income tax return.

  • Option 2: includes $0 in income with respect to the coronavirus-related distribution on the 2021 tax return and $30,000 in income on the 2022 federal income tax return. Also file an amended federal income tax return for 2020 to reduce the amount included in income as a result of the coronavirus-related distribution to $20,000 (that is, the $30,000 original amount includible in income for 2020 minus the remaining $10,000 recontribution that is not offset on either the 2021 or 2022 federal tax return).


Safe Harbor for Plan Loans

The CARES Act provides that in the case of a qualified individual with a loan from a qualified employer plan outstanding on or after March 27, 2020, if the due date for any repayment with respect to the loan occurs during the period beginning on March 27, 2020, and ending on December 31, 2020, the due date shall be delayed for one year. Under a safe harbor, a qualified employer plan will satisfy this requirement if a qualified individual’s obligation to repay a plan loan is suspended under the plan for any period beginning not earlier than March 27, 2020, and ending not later than December 31, 2020. The loan repayments must resume after the end of the suspension period, and the term of the loan may be extended by up to one year from the date the loan was originally due to be repaid.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

New, Revised PPP Forgiveness Applications

The Small Business Administration (SBA), in consultation with Treasury, has released both a new EZ and revised, full Paycheck Protection Program (PPP) loan forgiveness application.

The new and revised forms come on the heels of a recent request made by over 40 bipartisan senators to simplify the forgiveness filing process for certain borrowers. Additionally, the updated forms released on June 17 follow updated PPP guidance released last week.

The updated guidance and forms move to implement the Paycheck Protection Program Flexibility Act (PPPFA), which President Trump signed on June 5, 2020. The PPPFA aims to expand usability of the Coronavirus Aid, Relief, and Economic Security (CARES) Act’s PPP for small businesses.

Notably, both applications give borrowers the option of using the original 8-week covered period (if their loan was made before June 5, 2020) or the PPPFA’s extended 24-week covered period, according to Treasury’s June 17 press release. However, the EZ application requires fewer calculations and less documentation for eligible borrowers.

The new EZ forgiveness application can be located here.

The revised, full forgiveness application can be located here.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal tax defense.  Firm founder,  Joseph P. Wilson, is a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

 

 

IRS Reminds Taxpayers to File Taxes Electronically; Use Direct Deposit for Tax Refund

The IRS has reminded taxpayers who have not filed their 2019 federal tax return to file electronically and choose direct deposit for their refund. Further, taxpayers who owe taxes for 2019 or need to pay 2020 estimated taxes originally due for the first quarter on April 15 or the second quarter on June 15 can schedule an electronic payment up to the July 15 due date. The Service has urged taxpayers to use electronic options to support social distancing and speed the processing of tax returns, refunds and payments. Moreover, a list of forms due July 15 is on the Coronavirus Tax Relief: Filing and Payment Deadlines page.

For 2016 tax returns, the normal April 15 deadline to claim a refund is now July 15, 2020. The Service has also advised taxpayers to use direct deposit to deposit their refund into one, two or even three accounts. In addition, taxpayers can file and schedule their federal tax payments up to the July 15 due date. When paying federal taxes electronically taxpayers should remember that IRS Direct Pay allows them to pay online directly from a checking or savings account for free, and to schedule payments up to 365 days in advance. Individual tax filers, regardless of income, can use IRS Free File to electronically request an automatic tax-filing extension which gives them until October 15 to file their tax return. To get the extension, the taxpayers must estimate their tax liability on the extension form and should pay any amount due. Alternatively, taxpayers can get an extension by paying all or part of their estimated income tax due and indicate that the payment is for an extension using IRS Direct Pay, the Electronic Federal Tax Payment System (EFTPS), or a credit or debit card. The IRS has requested taxpayers to use the Interactive Tax Assistant (ITA) and go to IRS.gov/COVIDtaxdeadlines to get their tax-related queries addressed.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

IRS Rules Encourage Leave-Based Donation Programs for Victims of COVID-19

The IRS has provided relief to support employer leave-based donation programs to aid victims of the COVID-19 (coronavirus) pandemic. Under these programs, employees may forgo vacation, sick or personal leave in exchange for cash payments the employer makes to charitable organizations providing relief for the victims of the pandemic.

An employer’s donations under a leave-based donation program are not gross income or wages for the employees who surrendered leave so long as the donations are made in cash to a charitable organization for the relief for victims of the COVID-19 pandemic, before January 1, 2021. Similarly, the employee does not receive income or wages from the opportunity to forgo leave. Thus, the employer does not have to report its leave-based donations on the employee’s Form W-2.

An employee may not claim a charitable contribution deduction for the value of leave that is surrendered in a leave-based donation program and excluded from the employee’s wages. However, the employer can deduct its cash payments as a charitable contribution under Code Sec. 170 or as a ordinary and necessary business expense under Code Sec. 162 if the employer otherwise meets the respective requirements.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

California—Property Tax: Assessment Appeals Filing Periods Set for 2020

The regular appeals filing periods for 2020 for California county property tax assessments have been certified. The regular appeals filing periods will begin on July 2 and end on either:


  • September 15; or

  • November 30.


The end date a county uses depends on whether the county assessor mails assessment notices by August 1 to all taxpayers with property on the secured roll.

Letter to County Assessors, No. 2020/026, California State Board of Equalization, June 2, 2020

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

Tax Court Resumes Accepting Copy Requests; Proceedings Conducted Remotely

The Tax Court has announced that it will resume accepting requests for copies of court records from non-parties (copy requests) beginning June 1, 2020. The Tax Court also announced that all proceedings will be conducted remotely until further notice due to the Covid-19 pandemic.


Copy Requests

Until further notice, all copy requests must be made by telephone and will be fulfilled electronically by email. The Tax Court’s fees with respect to these copy requests will be $0.50 per page, with a per-document cap of $3.00. The Records Department can be reached at (202) 521- 4688. Litigants registered for electronic access continue to be able to electronically file and view documents in their cases without charge. Additional information can be obtained here.

Remote Proceedings

Administrative Order 2020-02 provides information regarding remote proceedings. Further, Administrative Order 2020-03 can be reviewed for obtaining information regarding Limited Entries of Appearance. More information can be found here.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

 

IRS’s People First Initiative Unveiled

The IRS announced that it unveiled the People First Initiative on March 25, 2020 to ease the burden on people facing tax issues as much as possible and to enable them to better focus on the well-being of themselves and others during the COVID-19 pandemic. This initiative is an unprecedented effort to temporarily scale back many collection and enforcement activities by the IRS during the COVID-19 global pandemic.

The IRS, in consultation with its partners, will continue to review the initiative and modify or expand it as necessary during this situation.

The People First Initiative modified numerous IRS compliance programs by providing taxpayers relief from the following programs:


  • Existing Installment Agreements,

  • New Installment Agreements,

  • Offers in Compromise (OIC),

  • Field Collection Activities - Liens and levies,

  • Automated Levies, and Systemic Liens and Levies,

  • Certifications of seriously delinquent tax liabilities to the State Department (impacting the issuance or renewal of a passport),

  • Private Debt Collection, and

  • Field, Office and Correspondence Audits.


Further, the IRS announced that while the IRS Independent Office of Appeals continues to work its cases, it would not hold in-person conferences with taxpayers. However, they may hold conferences over the telephone or by videoconference. Moreover, the IRS urged those who owe back taxes to take this opportunity to file delinquent returns and resolve any outstanding liabilities. Taxpayers can visit the IRS website for more information about payment options, including several options for taxpayers who may be unable pay the full amount now. Finally, additional information may be obtained at the following sites: IRS People First Initative FAQsCoronavirus Tax ReliefEmployee Retention Credit FAQs.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

E-File Your Amended Tax Return? Yes









WASHINGTON — The Internal Revenue Service announced yesterday that later this summer taxpayers will for the first time be able to file their Form 1040-X, Amended U.S Individual Income Tax Return, electronically using available tax software products.

Making the 1040-X an electronically filed form has been a goal of the IRS for a number of years. It's also been an ongoing request from the nation's tax professional community and has been a continuing recommendation from the Internal Revenue Service Advisory Council (IRSAC) and Electronic Tax Administration Advisory Committee (ETAAC).

Currently, taxpayers must mail a completed Form 1040-X to the IRS for processing. The new electronic option allows the IRS to receive amended returns faster while minimizing errors normally associated with manually completing the form.

"This new process is a major milestone for the IRS, and it follows hard work by people across the agency," said IRS Commissioner Chuck Rettig. "E-filing has been one of the great success stories of the IRS, and more than 90 percent of taxpayers use it routinely. But the big hurdle that's been remaining for years is to convert amended returns into this electronic process. Our teams have worked diligently to overcome the unique challenges related to the 1040-X, and we look forward to offering this new service this summer."

About 3 million Forms 1040-X are filed by taxpayers each year.

The new electronic filing option will provide the IRS with more complete and accurate data in an easily readable format to enable customer service representatives to answer taxpayers' questions. Taxpayers can still use the "Where's My Amended Return?" online tool to check the status of their electronically-filed 1040-X.

When the electronic filing option becomes available, only tax year 2019 Forms 1040 and 1040-SR returns can be amended electronically. In general, taxpayers will still have the option to submit a paper version of the Form 1040-X and should follow the instructions for preparing and submitting the paper form. Additional enhancements are planned for the future.

"Adding amended returns to the electronic family also complements our partnership with the tax software industry, which continues to work with us to provide better ways to help taxpayers," said Ken Corbin, Commissioner of the IRS Wage and Investment division.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal tax defense.  Firm founder and managing shareholder, Joseph P. Wilson, is a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.  The firm is entirely comprised of ex-IRS attorneys and Assistant US Attorneys.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)























Protests Cause California to Shutdown

It is reported that all California state departments and agencies have been asked to close their offices, in all cities’ downtown areas today, Monday June 1st, in preparation for possible protests.  In Los Angeles County, all 38 courthouses will be closed Monday.

Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal tax defense.  Firm founder and managing shareholder, Joseph P. Wilson, is a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.  The firm is entirely comprised of ex-IRS attorneys and Assistant US Attorneys.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)

IRS Extends Covid-19 Tax Relief to Alien Individuals

IRS updated its FAQs for Individuals Claiming the Medical Condition Exception on May 29. 2020 as follows:




The virus that causes COVID-19 has created a global outbreak (the COVID-19 Emergency) during which some alien individuals, who are present in the United States, have fallen or may fall ill with COVID-19 or experience other medical conditions or medical problems. Some of these individuals may have intended to leave the United States but were unable to leave due to a medication condition or problem, as described in section 7701(b)(3)(D)(ii). These individuals may be eligible to claim the medical condition exception to exclude certain days of U.S. presence from the substantial presence test, described in section 7701(b)(3), provided they meet the requirements described in section 7701(b)(3)(D)(ii) and section 301.7701(b)-3(c) (Medical Condition Exception). Alien individuals who are eligible to claim the Medical Condition Exception generally must file Form 8843, Statement for Exempt Individuals and Individuals With a Medical Condition , to obtain this exception, which requires a signed statement from a physician or other medical official that the alien individual was unable to leave the United States due to a medical condition or medical problem.


Due to considerations unique to the COVID-19 Emergency, it may be difficult to obtain a signed statement by a physician or other medical official attesting to the alien individual's inability to leave due to a medical condition. Accordingly, these FAQs modify the requirements for completing Part V of Form 8843 for certain alien individuals claiming the Medical Condition Exception during calendar year 2020. These FAQs also provide information regarding relevant record keeping requirements for persons filing Form 8843 without a physician's statement, either pursuant to these FAQs or the relief granted in Rev. Proc. 2020-20. Rev. Proc. 2020-20, published on May 11, 2020, provides relief for certain nonresident alien individuals stranded in the United States due to the COVID-19 Emergency; it describes procedures for Eligible Individuals to claim the COVID-19 Medical Condition Travel Exception, pursuant to which an Eligible Individual can exclude a single period of up to 60 consecutive calendar days of presence in the United States for purposes of applying the substantial presence test.



Q 1. Will an alien individual who intended to but is or was unable to leave the United States on the individual's planned departure date due to a medical condition or medical problem in calendar year 2020 be required to obtain a physician's statement as required by Part V of Form 8843?

A1. Any alien individual who is eligible and fulfills the requirements to claim the Medical Condition Exception may file the Form 8843 without a physician's statement to cover a single period of up to 30 consecutive calendar days in calendar year 2020 (30-Day Medical Condition). This FAQ does not modify the eligibility requirements to claim the Medical Condition Exception, only the procedures for claiming the exception on Part V of Form 8843 and only with respect to a single period of up to 30 consecutive calendar days of presence in the United States in calendar year 2020.


Pursuant to the Medical Condition Exception, any days of presence for which an alien individual is eligible and claims a 30-Day Medical Condition will be excluded for purposes of the substantial presence test. The exemption from the Form 8843 requirement to obtain a physician's statement for a 30-Day Medical Condition can be claimed in addition to the relief provided in Rev. Proc. 2020-20. The instructions to Form 8843 for 2020 will reflect the 30-Day Medical Condition contemplated by this FAQ.



Q2. What types of documentary evidence should alien individuals retain to support their eligibility for the 30-Day Medical Condition?

A2. In lieu of a physician's statement, alien individuals claiming the 30-Day Medical Condition should retain documentary evidence that substantiates their medical condition, their inability to leave due to the medical condition, and the period of the medical condition, such as (i) evidence of consultations with a heath care provider (for example, a phone bill or a text message or email from the health care provider), (ii) receipts related to healthcare purchases, (iii) evidence of canceled or changed travel reservations, or (iv) official medical records or written healthcare correspondence that the individual received (for example, automated responses instructing an individual to self-isolate). These documents should not be submitted with the Form 8843, but alien individuals claiming the 30-Day Medical Condition should be prepared to produce these records if requested by the IRS.



Q3. How should alien individuals who only claim the 30-Day Medical Condition complete Part V of Form 8843 (the section of the form applicable to individuals claiming the Medical Condition Exception)?

A3. For those claiming a 30-Day Medical Condition without claiming relief under Rev. Proc. 2020-20 or any other excluded days pursuant to the Medical Condition Exception, the alien individual should write “30-Day Medical Condition” and then describe in detail the 30-Day Medical Condition that prevented the alien individual from leaving the United States under Line 17a in Part V of Form 8843. When determining the information to include in line 17a, an alien individual should provide relevant information so that the individual can clearly demonstrate qualification for the Medical Condition Exception if the Form 8843 is later reviewed by the IRS with the corresponding documentary evidence discussed in FAQ 2, as applicable. Lines 17b and 17c should be completed consistently with the form's instructions. Line 18 of the form should be left blank. As described in FAQ 2, third-party documentary evidence of an alien individual's medical condition should not be submitted with the form, but should be retained by the alien individual.



Q4. How should alien individuals who claim multiple Medical Condition Exceptions complete Part V of Form 8843?

A 4. An alien individual may be able to claim multiple Medical Condition Exceptions and should file a single Form 8843 enumerating all the applicable Medical Condition Exceptions on line 17a. The alien individual should attach a separate statement with respect to each Medical Condition Exception being claimed along with the relevant corresponding information as outlined in Rev. Proc. 2020-20, in FAQ 3, or the existing instructions, as applicable. As an example, line 17a could read:


“Condition 1: COVID-19 MEDICAL CONDITION TRAVEL EXCEPTION;


Condition 2: 30-DAY MEDICAL CONDITION,”


Lines 17b and 17c of Part V should be left blank, but the relevant information for each applicable exception, as described in Rev. Proc. 2020-20 and in FAQ 3, along with the dates that would otherwise be reflected under line 17b and line 17c, would be included in each separate statement. Neither of these conditions require a physician's statement, and thus line 18 should be left blank. Note, however, if an alien individual is also claiming a Medical Condition Exception that requires a physician's statement, the signature and relevant information from line 18 should be included in the separate attachment related to that medical condition.



Q5. What types of documentary evidence should Eligible Individuals retain to support their eligibility for the relief provided under Rev. Proc. 2020-20?

A5. An Eligible Individual claiming relief under Rev. Proc. 2020-20 should retain evidence of the individual's presence in the United States during the individual's claimed COVID-19 Emergency Period (such as a Customs and Border Protection Form I-94 showing the individual's entries into the United States, hotel receipts, or travel reservations, including confirmation of changes or cancellations). If the Eligible Individual was actually ill or advised to self-quarantine in the United States during the individual's excluded days under the revenue procedure, he or she may also retain the documents described in FAQ 2 to demonstrate presence in the United States through U.S.-based medical records and treatments, though failure to document an actual illness will not affect eligibility to claim relief under Rev. Proc. 2020-20.


An Eligible Individual who does not qualify for the presumption of an intent to leave the United States outlined in section 4.02 of Rev. Proc. 2020-20 (meaning, the individual has applied, or otherwise taken steps, to become a lawful permanent resident of the United States but is not yet a lawful permanent resident), should also retain any documents that may support a “facts and circumstances” analysis of the Eligible Individual's intent to leave the United States under section 301.7701(b)-3(c)(2). These documents should not be submitted with the Form 8843, but Eligible Individuals claiming relief under Rev. Proc. 2020-20 should be prepared to produce these records if requested by the IRS.


Wilson Tax Law Group, APLC (www.wilsontaxlaw.com) is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. The firm was founded in 2014 by Joseph P. Wilson, a former Federal tax prosecutor, trial attorney for the IRS and trial attorney for the Franchise Tax Board.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Newport Beach and Yorba Linda, California

Tel: (949) 397-2292 (Newport Beach Office)

Tel: (714) 463-4430 (Yorba Linda Office)