IRS Publishes Final Regs on Disaster-Related Deadline Extensions

IRS Publishes Final Regs on Disaster-Related Deadline Extensions

Internal Revenue Service

The IRS has published final regulations (T.D. 9950) on the new mandatory 60-day postponement of some time-sensitive tax-related deadlines because of a federally declared disaster. The final regs adopt with minor modification proposed regs (<a href="/lr/resolve//2dq9x">REG-115057-20</a>) issued in January 2021. As discussed in the preamble to the proposed regs, section 7508A(d) is ambiguous because the time-sensitive acts to be postponed are not specified and it is unclear how the mandatory 60-day postponement period is calculated when the disaster declaration does not include an incident date. The IRS notes that the legislative history is insufficient to explain those areas of ambiguity. Therefore, the final regs clarify the definition of the term “federally declared disaster” and modify an example in the proposed regs to better illustrate the calculation of the mandatory 60-day postponement period. The final regs provide that the phrase “shall be disregarded in the same manner as a period specified under [section 7508A(a)]” in section 7508A(d)(1) first requires Treasury’s exercise of discretion under section 7508A(a) to specify the postponed set of time-sensitive acts for taxpayers (and potentially for the government) during the entirety of the postponement period under both section 7508A(a) and (d). Accordingly, if Treasury determines not to postpone a time-sensitive act using its discretionary authority under section 7508A(a), that act will also not be postponed under section 7508A(d). Similarly, if no time-sensitive acts are postponed under section 7508A(a), none will be postponed under section 7508A(d). The final regs provide that if a declaration establishing a federally declared disaster for purposes of section 7508A does not specify an incident date, there is no mandatory period for relief under section 7508A(d). If Treasury decides to postpone time-sensitive tax acts in response to a declaration, under the discretionary authority in section 7508A(a), the only postponement period will be the period determined by Treasury under section 7508A(a). The final regs apply only to the relief that is made available under section 7508A in the event of a federally declared disaster. It does not apply to other relief provisions under other provisions of the tax code that automatically arise as a result of a federally declared disaster, such as the loss provisions under section 165. The final regs do not adopt the view of a commentator who asserted that emergency declarations are governed by a different set of rules than major disaster declarations, and therefore declaring the COVID-19 pandemic an emergency under the Stafford Act did not serve as a disaster declaration under sections 165(i)(5)(A) and 7508A. The IRS responded that the differences observed by the commentator between emergencies and major disasters under the Stafford Act are not material to their treatment under sections 165(i)(5)(A) and 7508A, and therefore no change to the proposed regs was made. Regarding the status of the COVID-19 pandemic as a federally declared disaster, there is no mandatory 60-day postponement period under section 7508A(d) because the March 13, 2020, emergency declaration did not specify an incident date. The only postponement period provided under section 7508A for the time-sensitive acts postponed in response to that declaration are the periods determined by Treasury under section 7508A(a) and (b).

The IRS has published final regulations (T.D. 9950) on the new mandatory 60-day postponement of some time-sensitive tax-related deadlines because of a federally declared disaster.

The IRS has published final regulations (T.D. 9950) on the new mandatory 60-day postponement of some time-sensitive tax-related deadlines because of a federally declared disaster. The final regs adopt with minor modification proposed regs (REG-115057-20) issued in January 2021. As discussed in the preamble to the proposed regs, section 7508A(d) is ambiguous because the time-sensitive acts to be postponed are not specified and it is unclear how the mandatory 60-day postponement period is calculated when the disaster declaration does not include an incident date. The IRS notes that the legislative history is insufficient to explain those areas of ambiguity. Therefore, the final regs clarify the definition of the term “federally declared disaster” and modify an example in the proposed regs to better illustrate the calculation of the mandatory 60-day postponement period. The final regs provide that the phrase “shall be disregarded in the same manner as a period specified under [section 7508A(a)]” in section 7508A(d)(1) first requires Treasury’s exercise of discretion under section 7508A(a) to specify the postponed set of time-sensitive acts for taxpayers (and potentially for the government) during the entirety of the postponement period under both section 7508A(a) and (d). Accordingly, if Treasury determines not to postpone a time-sensitive act using its discretionary authority under section 7508A(a), that act will also not be postponed under section 7508A(d). Similarly, if no time-sensitive acts are postponed under section 7508A(a), none will be postponed under section 7508A(d). The final regs provide that if a declaration establishing a federally declared disaster for purposes of section 7508A does not specify an incident date, there is no mandatory period for relief under section 7508A(d). If Treasury decides to postpone time-sensitive tax acts in response to a declaration, under the discretionary authority in section 7508A(a), the only postponement period will be the period determined by Treasury under section 7508A(a). The final regs apply only to the relief that is made available under section 7508A in the event of a federally declared disaster. It does not apply to other relief provisions under other provisions of the tax code that automatically arise as a result of a federally declared disaster, such as the loss provisions under section 165. The final regs do not adopt the view of a commentator who asserted that emergency declarations are governed by a different set of rules than major disaster declarations, and therefore declaring the COVID-19 pandemic an emergency under the Stafford Act did not serve as a disaster declaration under sections 165(i)(5)(A) and 7508A. The IRS responded that the differences observed by the commentator between emergencies and major disasters under the Stafford Act are not material to their treatment under sections 165(i)(5)(A) and 7508A, and therefore no change to the proposed regs was made. Regarding the status of the COVID-19 pandemic as a federally declared disaster, there is no mandatory 60-day postponement period under section 7508A(d) because the March 13, 2020, emergency declaration did not specify an incident date. The only postponement period provided under section 7508A for the time-sensitive acts postponed in response to that declaration are the periods determined by Treasury under section 7508A(a) and (b).

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IRS Publishes Final Regs on Disaster-Related Deadline Extensions