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The Wavering Due Date For Tax Returns

Posted on May 4, 2020

Today’s guest post is by Monte A. Jackel, a practitioner at Jackel Tax Law, Silver Spring, Maryland, with decades of experience in the private and public sector whose expertise includes procedural issues and a deep knowledge of Subchapter K. Part 2 of this post will run tomorrow. Les


I will be addressing two recent developments. First, in Part 1, I will discuss the relevant extended due dates for filing returns, paying tax and related matters due to the coronavirus pandemic. And second, which will run tomorrow in Part 2, I will discuss the ability of the IRS to force a taxpayer to make a retroactive law change when the tax return when filed was true, correct and consistent with applicable law at that time.

Extended Due Dates

Section 7508A(a) authorizes the Treasury Secretary or his delegate to extend the due date of certain acts, such as the filing of the individual income tax return and the payment of the tax, for up to one year in the case of a federally declared disaster. In addition, added as part of P.L. 116-94 in December 2019, new section 7508A(d) mandates a sixty-day period after the latest incident date to perform such acts.

Both the Joint Committee on Taxation explanation (JCX-30-19, June 18, 2019, pp. 86-88) and the House Report to P.L. 116-94 (H.R. Rpt. 116-379, Jan. 21, 2020, pp. 97-100) indicate that the 60-day period referred to in section 7508A(d) “is in addition to, or concurrent with, as the case may be, any period of suspension provided by the Secretary [under section 7508A(a) and (b)].”

Section 7508A(d) generally provides that, in the case of any qualifying taxpayer, the period beginning on the earliest incident date specified in the disaster area declaration and ending on the date that is 60 days after the latest incident date shall not count in determining the due dates for the acts specified in section 7508(a). Generally, a qualifying taxpayer is a person whose principal connection is with the United States.

The president declared a national disaster for the coronavirus on March 13, 2020. The declaration consisted of a one-page declaration and a three-page letter. Together, these documents indicate a beginning date for the emergency of March 1, 2020, and indicate coverage throughout the United States.

FEMA followed up by issuing more specific guidance. However, it is not perfectly clear that the FEMA noticeshave the legal effect of modifying the terms of the presidential disaster declaration although that is presumably the end result that makes the most sense.

The language used in section 7508A(d) does not appear amenable to an emergency such as a pandemic which is continuing in nature with no objectively determinable beginning or ending dates. For example, if there is no ending incident date for the emergency, it would appear that the ending date would remain perpetually open and the specified due dates would never occur.

This, of course, makes no sense. And yet, recently issued pension regulations relating to the coronaviruscontain examples assuming both a beginning and ending date for the coronavirus pandemic and contain a general 60 day extension rule. Although section 7508A(d) is not cited in these regulations, the 60-day period seems more than a coincidence.

On April 29, the ABA Tax Section submitted a letter to the IRS with comments on the extension of various due dates relating to the coronavirus pandemic. It is a good and thorough letter. However, I would note that if the due dates are extended to the later of July 15, 2020 or 60 days from the end of the pandemic, as the report recommends, the IRS notices and revenue procedures already issued would need to be rewritten, supplemented and revised. For example, Notice 2020-23 is the key date extension guidance. It provides for a July 15 extended due date and does not cite or mention in any way section 7508A(d).

I was told from reliable informed sources inside the government that section 7508A(d) did not apply to the coronavirus pandemic because there was no “declaration date” in the presidential declaration and there was no “incident date” in this crisis like there would be for a hurricane or other natural disaster that is objectively determinable. That proposition is debatable. The JCT explanation, JCX-30-19, at pp. 87-88, discusses the statute but does not address a case like this although, literally, the JCT report could be read as mandatorily tacking on another 60 days at the end of the period regardless of the definitional terms in section 7508A(d) (incident date and declaration date). The House Report, H.R. Rep. 116-379, at p. 100, says more or less the same thing and does not clarify matters.

How likely is that to be done on a voluntary basis? Section 7508A(d) uses terms of art that specifically address specific objectively determinable disaster situations, such as a hurricane. I would not plan into using section 7508A(d) to obtain a date beyond July 15, 2020, but I would clearly raise the issue in an audit or in court. It is likely that a court will push to apply section 7508A(d) because, in cases such as the pandemic, the provision could otherwise be completely neutered.

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