[Federal Register: January 15, 2009 (Volume 74, Number 10)]
[Rules and Regulations]
[Page 2370-2373]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15ja09-13]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 301
[TD 9443]
RIN 1545-BG16
Postponement of Certain Tax-Related Deadlines by Reason of a
Federally Declared Disaster or Terroristic or Military Action
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Final regulation.
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SUMMARY: This document contains final regulations relating to
postponement of certain tax-related deadlines either due to service in
a combat zone or due to a federally declared disaster. The regulations
reflect changes in the law made by the Victims of Terrorism Tax Relief
Act of 2001, the Tax Extenders and Alternative Minimum Tax Relief Act
of 2008 (TEAMTRA), and current IRS practice. The regulations affect
taxpayers serving in a combat zone and taxpayers affected by a
federally declared disaster.
DATES: Effective Date: These regulations are effective on January 15,
2009.
Applicability Dates: For dates of applicability, see Sec.
301.7508A-1(g).
FOR FURTHER INFORMATION CONTACT: Mary Ellen Keys, (202) 622-4570 (not a
toll-free number).
SUPPLEMENTARY INFORMATION:
Background
This document contains amendments to the Procedure and
Administration Regulations (26 CFR part 301). Section 7508A of the
Internal Revenue Code (Code) relates to the postponement of certain
tax-related acts by reason of a federally declared disaster or
terroristic or military action. Section 7508A was added by section
911(a) of the Taxpayer Relief Act of 1997, Public Law 105-34 (111 Stat.
788, 877-78 (1997)) (the 1997 Act), which was effective for any period
for performing an act that had not expired before December 5, 1997.
A notice of proposed rulemaking (REG-142680-06) was published in
the Federal Register (73 FR 40471-01) on July 15, 2008. No comments
were received from the public in response to the notice of proposed
rulemaking, and no public hearing was requested or held. In this
Treasury decision, the proposed regulations are adopted as revised.
Explanation of Revisions
Section 301.7508A-1 of these final regulations is revised
throughout to use the term ``federally declared disaster'' instead of
the term ``Presidentially declared disaster'' when referring to any
disaster determined by the President of the United States to warrant
assistance by the Federal Government under the Robert T. Stafford
Disaster Relief and Emergency Assistance Act, 42 U.S.C. 5121, et seq.
(the ``Stafford Act''). Prior versions of these regulations and the
proposed regulations included the term ``Presidentially declared
disaster'' as defined in former Code section 1033(h)(3). Sec. 706(a) of
TEAMTRA, Div. C of Public Law 110-343 (122 Stat. 3765, 3920), amended
Code section 1033(h)(3) by replacing the term ``Presidentially declared
disaster'' with ``federally declared disaster'' and providing that the
term shall have the meaning given such term by section 165(h)(3)(C).
Section 165(h)(3)(C), added by section 706(a) of TEAMTRA, defines the
term ``federally declared disaster'' to mean any disaster subsequently
determined by the President of the United States to warrant assistance
by the Federal Government under the Stafford Act. This definition is
substantially the same as the definition of ``Presidentially declared
disaster'' under former section 1033(h)(C). Thus, these statutory
changes in terminology do not materially impact the meaning of either
the proposed or final regulations.
Section 301.7508A-1(d)(1) of the final regulations is revised to
expand the definition of ``affected taxpayer'' to include any
individual, business entity, or sole proprietorship not located in a
covered disaster area, but whose records necessary to meet a deadline
for an act specified in paragraph (c) of Sec. 301.7508A-1 are located
in the covered disaster area. Section 301.7508A-1(d)(1) of the final
regulations further expands the definition of affected taxpayer to
include any individual visiting the covered disaster area who was
killed or injured as a result of the disaster. These changes reflect
current IRS practice of broadly defining the term ``affected
taxpayer.''
Section 301.7508A-1(f) of the final regulations is revised to
include a new Example 9. Example 9, which reflects current IRS
practice, explains the impact of disaster relief on installment
agreement payments that become due during the postponement period.
Example 9 explains that the affected taxpayer's obligation to make
installment agreement payments is suspended during the postponement
period. Example 9 further explains that, because installment agreement
payments pertain to pre-existing tax liabilities, interest and
penalties
[[Page 2371]]
continue to accrue during the postponement period.
Special Analyses
It has been determined that these final regulations are not a
significant regulatory action as defined in Executive Order 12866.
Therefore, a regulatory assessment is not required. It has been
determined that section 553(b) of the Administrative Procedure Act (5
U.S.C. chapter 5) does not apply to these regulations. The regulations
do not impose a collection of information requirement on small business
entities, thus the Regulatory Flexibility Act (5 U.S.C. chapter 6) does
not apply. Pursuant to section 7805(f) of the Code, the notice of
proposed rulemaking preceding these regulations was submitted to the
Chief Counsel for Advocacy of the Small Business Administration for
comment on its impact on small business.
Drafting Information
The principal author of these final regulations is Mary Ellen Keys
of the Office of the Associate Chief Counsel (Procedure and
Administration).
List of Subjects in 26 CFR Part 301
Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income
taxes, Penalties, Reporting and recordkeeping requirements.
Adoption of Amendments to the Regulations
0
Accordingly, 26 CFR part 301 is amended as follows:
PART 301--PROCEDURE AND ADMINISTRATION
0
Paragraph 1. The authority citation for part 301 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
0
Par. 2. Section 301.7508A-1 is amended by:
0
1. Revising the section heading and paragraphs (b), (d)(1)(vii),
(d)(2), and (e).
0
2. Adding paragraphs (d)(1)(viii) and (d)(1)(ix), and (d)(3).
0
3. Removing paragraph (f), redesignating paragraphs (g) and (h) as
paragraphs (f) and (g), respectively, and revising them.
The revisions and additions read as follows:
Sec. 301.7508A-1 Postponement of certain tax-related deadlines by
reasons of a federally declared disaster or terroristic or military
action.
* * * * *
(b) Postponed deadlines--(1) In general. In the case of a taxpayer
determined by the Secretary to be affected by a federally declared
disaster (as defined in section 1033(h)(3)) or a terroristic or
military action (as defined in section 692(c)(2)), the Secretary may
specify a postponement period (as defined in paragraph (d)(1) of this
section) of up to one year that may be disregarded in determining under
the internal revenue laws, in respect of any tax liability of the
affected taxpayer (as defined in paragraph (d)(1) of this section)--
(i) Whether any or all of the acts described in paragraph (c) of
this section were performed within the time prescribed;
(ii) The amount of interest, penalty, additional amount, or
addition to the tax; and
(iii) The amount of credit or refund.
(2) Effect of postponement period. When an affected taxpayer is
required to perform a tax-related act by a due date that falls within
the postponement period, the affected taxpayer is eligible for
postponement of time to perform the act until the last day of the
period. The affected taxpayer is eligible for relief from interest,
penalties, additional amounts, or additions to tax during the
postponement period.
(3) Interaction between postponement period and extensions of time
to file or pay--(i) In general. The postponement period under section
7508A runs concurrently with extensions of time to file and pay, if
any, under other sections of the Internal Revenue Code.
(ii) Original due date prior to, but extended due date within, the
postponement period. When the original due date precedes the first day
of the postponement period and the extended due date falls within the
postponement period, the following rules apply. If an affected taxpayer
received an extension of time to file, filing will be timely on or
before the last day of the postponement period, and the taxpayer is
eligible for relief from penalties or additions to tax related to the
failure to file during the postponement period. Similarly, if an
affected taxpayer received an extension of time to pay, payment will be
timely on or before the last day of the postponement period, and the
taxpayer is eligible for relief from interest, penalties, additions to
tax, or additional amounts related to the failure to pay during the
postponement period.
(4) Due date not extended. The postponement of the deadline of a
tax-related act does not extend the due date for the act, but merely
allows the IRS to disregard a time period of up to one year for
performance of the act. To the extent that other statutes may rely on
the date a return is due to be filed, the postponement period will not
change the due date of the return.
(5) Additional relief. The rules of this paragraph (b) demonstrate
how the IRS generally implements section 7508A. The IRS may determine,
however, that additional relief to taxpayers is appropriate and may
provide additional relief to the extent allowed under section 7508A. To
the extent that the IRS grants additional relief, the IRS will provide
specific guidance on the scope of relief in the manner provided in
paragraph (e) of this section.
* * * * *
(d) * * *
(1) * * *
(vii) Any individual, business entity, or sole proprietorship not
located in a covered disaster area, but whose records necessary to meet
a deadline for an act specified in paragraph (c) of this section are
located in the covered disaster area;
(viii) Any individual visiting the covered disaster area who was
killed or injured as a result of the disaster; or
(ix) Any other person determined by the IRS to be affected by a
federally declared disaster (within the meaning of section 1033(h)(3)).
(2) Covered disaster area means an area of a federally declared
disaster (within the meaning of section 1033(h)(3)) to which the IRS
has determined paragraph (b) of this section applies.
(3) Postponement period means the period of time (up to one year)
that the IRS postpones deadlines for performing tax-related acts under
section 7508A.
(e) Notice of postponement of certain acts. If a tax-related
deadline is postponed under section 7508A and this section, the IRS
will publish a revenue ruling, revenue procedure, notice, announcement,
news release, or other guidance (see Sec. 601.601(d)(2) of this
chapter) describing the acts postponed, the postponement period, and
the location of the covered disaster area. Guidance under this
paragraph (e) will be published as soon as practicable after the
occurrence of a terroristic or military action or declaration of a
federally declared disaster.
(f) Examples. The rules of this section are illustrated by the
following examples:
Example 1. (i) Corporation X, a calendar year taxpayer, has its
principal place of business in County M in State W. Pursuant to a
timely filed request for extension of time to file, Corporation X's
2008 Form 1120, ``U.S. Corporation Income Tax Return,'' is due on
September 15, 2009. Also due on September 15, 2009, is Corporation
X's third quarter estimated tax payment for 2009. Corporation X's
2009 third quarter Form 720,
[[Page 2372]]
``Quarterly Federal Excise Tax Return,'' and third quarter Form 941,
``Employer's Quarterly Federal Tax Return,'' are due on October 31,
2009. In addition, Corporation X has an employment tax deposit due
on September 15, 2009.
(ii) On September 1, 2009, a hurricane strikes County M in State
W. On September 7, 2009, certain counties in State W (including
County M) are determined to be disaster areas within the meaning of
section 1033(h)(3) that are eligible for assistance by the Federal
government under the Stafford Act. Also on September 7, 2009, the
IRS determines that County M in State W is a covered disaster area
and publishes guidance announcing that the time period for affected
taxpayers to file returns, pay taxes, and perform other time-
sensitive acts falling on or after September 1, 2009, and on or
before November 30, 2009, has been postponed to November 30, 2009,
pursuant to section 7508A.
(iii) Because Corporation X's principal place of business is in
County M, Corporation X is an affected taxpayer. Accordingly,
Corporation X's 2008 Form 1120 will be timely if filed on or before
November 30, 2009. Corporation X's 2009 third quarter estimated tax
payment will be timely if made on or before November 30, 2009. In
addition, pursuant to paragraph (c) of this section, Corporation X's
2009 third quarter Form 720 and third quarter Form 941 will be
timely if filed on or before November 30, 2009. However, because
deposits of taxes are excluded from the scope of paragraph (c) of
this section, Corporation X's employment tax deposit is due on
September 15, 2009. In addition, Corporation X's deposits relating
to the third quarter Form 720 are not postponed. Absent reasonable
cause, Corporation X is subject to the failure to deposit penalty
under section 6656 and accrual of interest.
Example 2. The facts are the same as in Example 1, except that
because of the severity of the hurricane, the IRS determines that
postponement of government acts is necessary. During 2009,
Corporation X's 2005 Form 1120 is being examined by the IRS.
Pursuant to a timely filed request for extension of time to file,
Corporation X timely filed its 2005 Form 1120 on September 15, 2006.
Without application of this section, the statute of limitation on
assessment for the 2005 income tax year will expire on September 15,
2009. However, pursuant to paragraph (c) of this section, assessment
of tax is one of the government acts for which up to one year may be
disregarded. Because September 15, 2009, falls within the period in
which government acts are postponed, the statute of limitation on
assessment for Corporation X's 2005 income tax will expire on
November 30, 2009. Because Corporation X did not timely file an
extension of time to pay, payment of its 2005 income tax was due on
March 15, 2006. As such, Corporation X will be subject to the
failure to pay penalty and related interest beginning on March 15,
2006. The due date for payment of Corporation X's 2005 income tax
preceded the postponement period. Therefore, Corporation X is not
entitled to the suspension of interest or penalties during the
disaster period with respect to its 2005 income tax liability.
Example 3. The facts are the same as in Example 2, except that
the examination of the 2005 taxable year was completed earlier in
2009, and on July 28, 2009, the IRS mailed a statutory notice of
deficiency to Corporation X. Without application of this section,
Corporation X has 90 days (or until October 26, 2009) to file a
petition with the Tax Court. However, pursuant to paragraph (c) of
this section, filing a petition with the Tax Court is one of the
taxpayer acts for which a period of up to one year may be
disregarded. Because Corporation X is an affected taxpayer,
Corporation X's petition to the Tax Court will be timely if filed on
or before November 30, 2009, the last day of the postponement
period.
Example 4. (i) H and W, individual calendar year taxpayers,
intend to file a joint Form 1040, ``U.S. Individual Income Tax
Return,'' for the 2008 taxable year and are required to file a
Schedule H, ``Household Employment Taxes.'' The joint return is due
on April 15, 2009. H and W's principal residence is in County M in
State Q.
(ii) On April 2, 2009, a severe ice storm strikes County M. On
April 5, 2009, certain counties in State Q (including County M) are
determined to be disaster areas within the meaning of section
1033(h)(3) that are eligible for assistance by the Federal
government under the Stafford Act. Also on April 5, 2009, the IRS
determines that County M in State Q is a covered disaster area and
publishes guidance announcing that the time period for affected
taxpayers to file returns, pay taxes, and perform other time-
sensitive acts falling on or after April 2, 2009, and on or before
June 2, 2009, has been postponed to June 2, 2009.
(iii) Because H and W's principal residence is in County M, H
and W are affected taxpayers. April 15, 2009, the due date for the
filing of H and W's 2008 Form 1040 and Schedule H, falls within the
postponement period described in the IRS published guidance. Thus, H
and W's return will be timely if filed on or before June 2, 2009. If
H and W request an extension of time to file under section 6081 on
or before June 2, 2009, the extension is deemed to have been filed
by April 15, 2009. Thus, H and W's return will be timely if filed on
or before October 15, 2009.
(iv) April 15, 2009, is also the due date for the payment due on
the return. This date falls within the postponement period described
in the IRS published guidance. Thus, the payment of tax due with the
return will be timely if paid on or before June 2, 2009 the last day
of the postponement period. If H and W fail to pay the tax due on
the 2008 Form 1040 by June 2, 2009, and do not receive an extension
of time to pay under section 6161, H and W will be subject to
failure to pay penalties and accrual of interest beginning on June
3, 2009.
Example 5. (i) H and W, residents of County D in State G, intend
to file an amended return to request a refund of 2008 taxes. H and W
timely filed their 2008 income tax return on April 15, 2009. Under
section 6511(a), H and W's amended 2008 tax return must be filed on
or before April 16, 2012 (because April 15, 2012 falls on a Sunday,
H and W's amended return was due to be filed on April 16, 2012).
(ii) On April 2, 2012, an earthquake strikes County D. On April
6, 2012, certain counties in State G (including County D) are
determined to be disaster areas within the meaning of section
1033(h)(3) that are eligible for assistance by the Federal
government under the Stafford Act. Also on April 6, 2012, the IRS
determines that County D in State G is a covered disaster area and
publishes guidance announcing that the time period for affected
taxpayers to file returns, pay taxes, and perform other time-
sensitive acts falling on or after April 2, 2012, and on or before
October 2, 2012, has been postponed to October 2, 2012.
(iii) Under paragraph (c) of this section, filing a claim for
refund of tax is one of the taxpayer acts for which the IRS may
disregard a period of up to one year. The postponement period for
this disaster begins on April 2, 2012, and ends on October 2, 2012.
Accordingly, H and W's claim for refund for 2008 taxes will be
timely if filed on or before October 2, 2012. Moreover, in applying
the lookback period in section 6511(b)(2)(A), which limits the
amount of the allowable refund, the period from October 2, 2012,
back to April 2, 2012, is disregarded under paragraph (b)(1)(iii) of
this section. Thus, if the claim is filed on or before October 2,
2012, amounts deemed paid on April 15, 2009, under section 6513(b),
such as estimated tax and tax withheld from wages, will have been
paid within the lookback period of section 6511(b)(2)(A).
Example 6. (i) A is an unmarried, calendar year taxpayer whose
principal residence is located in County W in State Q. A intends to
file a Form 1040 for the 2008 taxable year. The return is due on
April 15, 2009. A timely files Form 4868, ``Application for
Automatic Extension of Time to File U.S. Individual Income Tax
Return.'' Due to A's timely filing of Form 4868, the extended filing
deadline for A's 2008 tax return is October 15, 2009. Because A
timely requested an extension of time to file, A will not be subject
to the failure to file penalty under section 6651(a)(1), if A files
the 2008 Form 1040 on or before October 15, 2009. However, A failed
to pay the tax due on the return by April 15, 2009 and did not
receive an extension of time to pay under section 6161. Absent
reasonable cause, A is subject to the failure to pay penalty under
section 6651(a)(2) and accrual of interest.
(ii) On September 30, 2009, a blizzard strikes County W. On
October 5, 2009, certain counties in State Q (including County W)
are determined to be disaster areas within the meaning of section
1033(h)(3) that are eligible for assistance by the Federal
government under the Stafford Act. Also on October 5, 2009, the IRS
determines that County W in State Q is a covered disaster area and
announces that the time period for affected taxpayers to file
returns, pay taxes, and perform other time-sensitive acts falling on
or after September 30, 2009, and on or before December 2, 2009, has
been postponed to December 2, 2009.
(iii) Because A's principal residence is in County W, A is an
affected taxpayer. Because
[[Page 2373]]
October 15, 2009, the extended due date to file A's 2008 Form 1040,
falls within the postponement period described in the IRS's
published guidance, A's return is timely if filed on or before
December 2, 2009. However, the payment due date, April 15, 2009,
preceded the postponement period. Thus, A will continue to be
subject to failure to pay penalties and accrual of interest during
the postponement period.
Example 7. (i) H and W, individual calendar year taxpayers,
intend to file a joint Form 1040 for the 2008 taxable year. The
joint return is due on April 15, 2009. After credits for taxes
withheld on wages and estimated tax payments, H and W owe tax for
the 2008 taxable year. H and W's principal residence is in County J
in State W.
(ii) On March 3, 2009, severe flooding strikes County J. On
March 6, 2009, certain counties in State W (including County J) are
determined to be disaster areas within the meaning of section
1033(h)(3) that are eligible for assistance by the Federal
government under the Stafford Act. Also on March 6, 2009, the IRS
determines that County J in State W is a covered disaster area and
publishes guidance announcing that the time period for affected
taxpayers to file returns, pay taxes, and perform other time-
sensitive acts falling on or after March 3, 2009, and on or before
June 1, 2009, has been postponed to June 1, 2009.
(iii) Because H and W's principal residence is in County J, H
and W are affected taxpayers. April 15, 2009, the due date for
filing the 2008 joint return, falls within the postponement period
described in the IRS published guidance. Therefore, H and W's joint
return without extension will be timely if filed on or before June
1, 2009. Similarly, H and W's 2008 income taxes will be timely paid
if paid on or before June 1, 2009.
(iv) On April 30, 2009, H and W timely file Form 4868,
``Application for Automatic Extension of Time to File U.S.
Individual Income Tax Return.'' H and W's extension will be deemed
to have been filed on April 15, 2009. Thus, H and W's 2008 income
tax return will be timely if filed on or before October 15, 2009.
(v) H and W did not request or receive an extension of time to
pay. Therefore, the payment of tax due with the 2008 joint return
will be timely if paid on or before June 1, 2009. If H and W fail to
pay the tax due on the 2008 joint return by June 1, 2009, H and W
will be subject to failure to pay penalties and accrual of interest
beginning on June 2, 2009.
Example 8. The facts are the same as in Example 7 except that H
and W file the joint 2008 return and pay the tax due on April 15,
2009. Later, H and W discover additional deductions that would lower
their taxable income for 2008. On June 1, 2012, H and W file a claim
for refund under section 6511(a). The amount of H and W's
overpayment exceeds the amount of taxes paid on April 15, 2009.
Section 6511(a) generally requires that a claim for refund be filed
within three years from the time the return was filed or two years
from the time the tax was paid, whichever period expires later.
Section 6511(b)(2)(A) includes within the lookback period the period
of an extension of time to file. Thus, payments that H and W made on
or after June 1, 2009 would be eligible to be refunded. Because the
period from April 15, 2009 to June 1, 2009 is disregarded, the
payments H and W made on April 15, 2009 (including withholding or
estimated tax payments deemed to have been made on April 15, 2009)
would also be included in the section 6511(b)(2)(A) lookback period.
Thus, H and W are entitled to a full refund in the amount of their
overpayment.
Example 9. (i) H and W, individual calendar year taxpayers,
entered into an installment agreement with respect to their 2006 tax
liabilities. H and W's installment agreement required H and W to
make regularly scheduled installment payments on the 15th day of the
month for the next 60 months. H and W's principal residence is in
County K in State X.
(ii) On May 1, 2009, severe flooding strikes County K. On May 5,
2009, certain counties in State X including County K) are determined
by the Federal government to be disaster areas within the meaning of
section 1033(h)(3), and are eligible for assistance under the
Stafford Act. Also on May 5, 2009, the IRS determines that County K
in State X is a covered disaster area and publishes guidance
announcing that the time period for affected taxpayers to file
returns, pay taxes, and perform other time-sensitive acts falling on
or after May 1, 2009 and on or before July 1, 2009, has been
postponed to July 1, 2009.
(iii) Because H and W's principal residence is in County K, H
and W are affected taxpayers. Pursuant to the IRS's grant of relief
under section 7508A, H and W's installment agreement payments that
become due during the postponement period are suspended until after
the postponement period has ended. H and W will be required to
resume payments no later than August 15, 2009. Skipped payments will
be tacked on at the end of the installment payment period. Because
the installment agreement pertains to prior year tax liabilities,
interest and penalties will continue to accrue. H and W may,
however, be entitled to abatement of the failure to pay penalties
incurred during the postponement period upon establishing reasonable
cause.
(g) Effective/applicability date. This section applies to disasters
declared after January 15, 2009.
Linda E. Stiff,
Deputy Commissioner for Services and Enforcement.
Approved: January 6, 2009.
Eric Solomon,
Assistant Secretary of the Treasury (Tax Policy).
[FR Doc. E9-767 Filed 1-14-09; 8:45 am]
BILLING CODE 4830-01-P