IRS Argues Time for Filing Tax Court Petition Was Not Extended

AIRREYON S. LOWE,
Petitioner,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent.

UNITED STATES TAX COURT

RESPONDENT'S RESPONSE TO PETITIONER'S SUPPLEMENTAL OBJECTION TO RESPONDENT'S MOTION TO DISMISS FOR LACK OF JURISDICTION

Respondent mailed petitioner a notice of deficiency for the year 2017, dated December 2, 2019. The 90-day period from the date of the notice of deficiency expired on March 2, 2020, which date was not a Saturday, a Sunday, or a legal holiday in the District of Columbia.¹ Petitioner did not mail her petition to the United States Tax Court until March 3, 2020. On June 16, 2020, respondent filed a motion to dismiss this case for lack of jurisdiction. There is no dispute that petitioner failed to file her petition within the time prescribed by sections 6213(a) or 7502. Petitioner argues in her supplemental objection to respondent's motion that the deadline to file her petitioner with the Tax Court was postponed by section 7508A(d).

Petititioner is incorrect. Petitioner makes some unrealistic assumptions about the time-sensitive acts included in section 7508A(d) and how the section is triggered. Importantly, petitioner misses the interplay between sections 7508A(a) and 7508A(d). As discussed below, section 7508A(d) is not triggered without the Secretary using his discretionary authourity under section 7508A(a).

Time-Sensitive Acts

Under section 7508A(a), the Secretary has discretionary authority to determine which time-sensitive acts can be postponed, up to one year, due to a Federally declared disaster. Included in these time-sensitive acts are acts due to be performed by taxpayers or the government. See §301.7508A-1(c). Section 7508A(a) is not self-executing; it does not postpone the deadline for performing any time-sensitive act on its own. The Secretary must proactively determine that a particular group of taxpayers is affected by a Federally declared disaster, that the deadline for performing certain time-sensitive acts by these taxpayers (or performed by the government with respect to these taxpayers) should be postponed, and the period of time over which the postponement should apply. It is ultimately the Secretary, not section 7508A(a), that determines which time-sensitive acts are postponed. Section 7508A(a) gives the Secretary the discretion to determine which time-sensitive acts under the Code should be postponed in the event of a Federally declared disaster. The acts available to be postponed include, by cross-reference in section 7508A(a)(1), all of the acts listed in section 7508(a)(1).

Section 7508A(d) provides a mandatory postponement period to apply “in the same manner as” the postponement period provided for in section 7508A(a). The mandatory postponement applies to qualified taxpayers for the time period from the earliest incident date specified in the declaration to 60 days after the latest incident date specified in the declaration. I.R.C. § 7508A(d)(1). Except for the rules regarding pensions described in section 7508A(d)(4), section 7508A(d) does not specify the time-sensitive tax acts to be postponed during the mandatory 60-day postponement period. Section 7508A(d) only states that the mandatory period of time to be disregarded in postponing time-sensitive acts will be disregarded “in the same manner as the period specified in subsection (a).” Petitioner suggests that this silence as to the time-sensitive acts in section 7508A(d) somehow translates into the notion that all time-sensitive acts to which the Secretary has discretion to postpone have a mandatory 60 day postponement under section 7508A(d). This includes time-sensitive acts to be performed by the government. A reading of the statutory text of section 7508A(d) does not lead to such a drastic conclusion nor does it indicate that Congress intended such a result.

The Secretary has discretion under section 7508A(a) to determine which time-sensitive acts should be postponed in a Federally declared disaster. This is for good reason. Not all Federally declared disasters are created equal and the response should be specific to the situation. Indeed, when the Secretary uses discretionary authority to postpone certain time-sensitive acts, the Secretary never postpones all of the time-sensitive acts that the Secretary has the authority to postpone (including acts to be performed by the government). The Secretary chooses to limit the response under section 7508A(a) to tailor it to the specific situation. There is no logical reason to assume that time-sensitive acts under section section 7508A(d) includes all of the potential time sensitive acts under section 7508A(a) and section 7508(a)(1).

It also does not make sense that since section 7508A(d) is silent as to what acts are to be postponed, then no acts are postponed. Such a result would render the subsection meaningless. It can only be that the time-sensitive acts postponed by the Secretary pursuant to subsection (a) are the acts that are postponed by subsection (d). The latter result is consistent with the language in the statute requiring that the mandatory period of time to be disregarded in postponing time-sensitive acts be “in the same manner as a period specified under [section 7508A(a)].”

Congress chose to explicitly state certain relief applicable to pensions in subsection (d). If Congress intended subsection (d) to operate independently of subsection (a) for other tax acts, it knew how to explicitly state provisions of relief independent of subsection (a).

The time-sensitive acts under section 7508A(d) flow from the Secretary's discretionary actions under section 7508A(a). Therefore, any mandatory postponement under section 7508A(d) is predicated on the Secretary affirmatively determining which deadlines are postponed under subsection (a). If there are no time-sensitive acts postponed under section section 7508A(a), then there are no time-sensitive act postponed under section 7508A(d).

Section 7508A(d) does not trigger the postponement of time-sensitive acts. Instead, it ensures that the postponement of time-sensitive acts determined by the Secretary under section 7508A(a) will not be less than a mandatory 60 days and will be provided to all qualified taxpayers as defined in section 7508A(d)(2). When the postponement period determined by the Secretary under section 7508A(a) is greater than or equal to 60 days, the mandatory 60 day period described in section 7508A(d) runs concurrently with such period. However, if the Secretary determines a period that is less than 60 days, section 7508A(d) will continue after the section 7508A(a) period expires to ensure a mandatory 60 days. See I.R.C. § 7508A(d)(5).

Incident Date

The mandatory postponement in section § 7508A(d) applies from the earliest incident date specified in the declaration to 60 days after the latest incident date specified in the declaration. I.R.C. § 7508A(d)(1). So, for example, if a Federally declared disaster begins and ends on the same date, then the mandatory period will begin on that date and end 60 days after that date, for a total period lasting 61 days. If the Federally declared disaster ends 5 days after it began, then the mandatory period will begin on the first date of the disaster and end 60 days after the end date, for a total period lasting 66 days.

The measurement of the 60-day period is dependent upon incident dates being provided in the disaster declaration upon which the relief under section 7508A is being provided. I.R.C. § 7508A(d)(1). As a result, where the disaster declaration does not specify any incident date, the 60-day period cannot be calculated.² In that case, there is no mandatory period under section 7508A(d). Applying section 7508A(d) to a declaration in which there is no specified incident date both contradicts the plain language of the statute, which requires a date from which to calculate the relief period, and opens up the possibility of a prolonged postponement period that also renders the intended “Mandatory 60-day extension” described in the title meaningless. Moreover, section 7508A(d) specifically applies “in the same manner as . . . [section 7508A(a)].” There is no reason to believe Congress intended the relief provided in section 7508A(d), a subsection addressed in terms of “days,” to extend beyond the maximum period of relief allowed in section 7508A(a), which is a period of one year. A longer postponement would contradict the directive that the mandatory postponement period in section § 7508A(d) be applied “ in the same manner as a period specified under [section 7508A(a)].” Where a declaration does not specify an incident date, there is no mandatory period for relief under section 7508A(d). If the Secretary postpones certain time-sensitive tax acts under the discretionary authority in section 7508A(a), the only applicable postponement period is that determined by the Secretary under section 7508A(a).

Application to the Case

On March 13, 2020, President Trump declared an emergency under section 501(b) of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (Stafford Act),³ thereby establishing a Federally declared disaster for purposes of section 7508A.⁴ In response, pursuant to the discretionary authority under section 7508A(a) and (b), the Secretary determined the taxpayers affected by the disaster, the time-sensitive tax acts that should be postponed, and the time period for postponement. See, e.g. Notice 2020-17 (issued March 18, 2020),⁵ Notice 2020-18 (superseding Notice 2020-17, issued March 20, 2020),⁶ Notice 2020-20 (amplifying Notice 2020-18, issued March 27, 2020),⁷ and Notice 2020-23 (amplifying Notices 2020-18 and 2020-20, issued April 9, 2020).⁸ Each notice explicitly stated that it was issued pursuant to President Trump's March 13, 2020, declaration. Because that declaration did not specify an incident date, there is no mandatory 60-day postponement period under section 7508A(d). The only postponement period provided under section 7508A for the time-sensitive acts postponed in response to that declaration are the periods determined by the Secretary under section 7508A(a) and (b).

The President subsequently approved major disaster declarations under section 401 of the Stafford Act for all 50 states, the District of Columbia, and 5 U.S. territories, in connection with the COVID-19 pandemic. Those declarations specified an incident period of “January 20, 2020 and continuing.” The Secretary did not use his discretion under section 7508A(a) to postpone any time-sensitive tax acts in response to those state-by-state declarations. As discussed earlier, a period for performing acts cannot be disregarded under section 7508A(d) “in the same manner as a period specified under [section 7508A(a)]” if the Secretary does not in fact disregard a period for performing such acts under section 7508A(a) in connection with a declaration. As a result, section 7508A(d) does not operate to postpone any acts for a mandatory 60-day period in connection with those state-by-state declarations.

Conclusion

No mandatory postponement period under section 7508A(d) applies in this case because the President's March 13, 2020 declaration, pursuant to which the Secretary granted relief, did not specify an incident date as required by section 7508A(d). Additionally, no mandatory postponement period under section 7508A(d) applies in this case because the Secretary did not grant relief pursuant to any of the state specific declarations, which is required for the period provided in section 7508A(d) to be treated “in the same manner as the period specified in subsection (a).”

On January 13, 2021, the Department of Treasury issue a notice of proposed rulemaking on for the Mandatory 60-Day Postponement of Certain Tax-Related Deadlines by Reason of Federally Decalred Disaster. 86 Fed. Reg. 2607 (Jan. 13, 2021). Respondent's position in this case is consistent with the proposed rulemaking.

WILLIAM M. PAUL
Acting Chief Counsel
Internal Revenue Service

By: HARRY J. NEGROEO
Associate Area Counsel, Area 2
Philadelphia 1
(Small Business/Self Employed)
Tax Court Bar No. NH0104
600 Arch Street
Suite 03-L14-01
Philadelphia, PA 19106-1611
Telephone: (267) 941-6555
harry.j.negro@irscounsel.treas.gov

Date: 1/29/2021

OF COUNSEL:

JOSEPH W. SPIRES
Division Counsel
(Small Business/Self Employed)

NANCY B. ROMANO
Area Counsel, Area 2
(Small Business/Self Employed)