[Federal Register Volume 86, Number 8 (Wednesday, January 13, 2021)]
[Proposed Rules]
[Pages 2607-2614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00185]


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DEPARTMENT OF THE TREASURY

Internal Revenue Service

26 CFR Parts 1 and 301

[REG-115057-20]
RIN 1545-BP98


Mandatory 60-Day Postponement of Certain Tax-Related Deadlines by 
Reason of a Federally Declared Disaster

AGENCY: Internal Revenue Service (IRS), Treasury.

ACTIONS: Notice of proposed rulemaking.

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SUMMARY: This document contains proposed regulations relating to the 
new mandatory 60-day postponement of certain time-sensitive tax-related 
deadlines by reason of a Federally declared disaster. This document 
also contains proposed regulations clarifying the definition of 
``Federally declared disaster.'' These proposed regulations affect 
individuals who reside in or were killed or injured in a disaster area, 
businesses that have a principal place of business in a disaster area, 
relief workers who provide assistance in a disaster area, or any 
taxpayer whose tax records necessary to meet a tax deadline are located 
in a disaster area. This document invites comments from the public 
regarding these proposed regulations.

DATES: Written or electronic comments and requests for a public hearing 
must be received by March 15, 2021. Requests for a public hearing must 
be submitted as prescribed in the ``Comments and Requests for a Public 
Hearing'' section.

ADDRESSES: Commenters are strongly encouraged to submit public comments 
electronically. Submit electronic submissions via the Federal 
eRulemaking Portal at www.regulations.gov (indicate IRS and

[[Page 2608]]

REG-115057-20) by following the online instructions for submitting 
comments. Once submitted to the Federal eRulemaking Portal, comments 
cannot be edited or withdrawn. The IRS expects to have limited 
personnel available to process public comments that are submitted on 
paper through mail. Until further notice, any comments submitted on 
paper will be considered to the extent practicable. The Department of 
the Treasury (Treasury Department) and the IRS will publish for public 
availability any comment submitted electronically, and to the extent 
practicable on paper, to its public docket. Send paper submissions to: 
CC:PA:LPD:PR (REG-115057-20), room 5203, Internal Revenue Service, P.O. 
Box 7604, Ben Franklin Station, Washington, DC 20044.

FOR FURTHER INFORMATION CONTACT:  Concerning the proposed regulations, 
William V. Spatz at (202) 317-5461; concerning submission of comments, 
Regina Johnson, (202) 317-5177; (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

    These proposed regulations amend the Procedure and Administration 
Regulations (26 CFR part 301) under section 7508A of the Internal 
Revenue Code (Code) relating to the discretionary authority of the 
Secretary of the Treasury or his delegate (Secretary) to postpone 
certain time-sensitive tax deadlines by reason of a Federally declared 
disaster. These proposed regulations also amend the Income Tax 
Regulations (26 CFR part 1) under section 165 to clarify the definition 
of Federally declared disaster.

I. FEMA Procedures for Declaring a Disaster and Providing Relief

    When it is apparent that a Federal disaster declaration, pursuant 
to the Robert T. Stafford Disaster Relief and Emergency Assistance Act 
(Stafford Act), Public Law 93-288, as amended, 42 U.S.C. 5121 et seq, 
may be necessary to assist in the recovery of an affected area, a 
state, territory, or tribal government may contact the appropriate 
regional office of the Federal Emergency Management Agency (FEMA) and 
request a joint Federal-state, territory, or tribal government 
Preliminary Damage Assessment (PDA). Local government representatives 
are also included, if possible. Together, the team conducts an 
assessment of the affected area to determine the extent of the 
disaster, its impact on individuals and public facilities, and the 
types of Federal assistance that may be needed. This information is 
gathered to show whether the disaster is of such severity and magnitude 
that an effective response is beyond the capabilities of the state, 
territory, or tribal governments and the affected local governments and 
that supplemental Federal assistance is necessary. See 44 CFR 206.33.
    After the PDA is complete and the chief executive of the state, 
territory, or tribal government determines that the damage from the 
major disaster exceeds the state's, territory's, or tribal government's 
resources, the executive may submit a declaration request to the 
President through the applicable FEMA Regional Office.\1\ As part of 
the request, the chief executive must furnish information on the nature 
and amount of state, territory, or tribal government and local 
resources that have been or will be committed to alleviating the 
results of the disaster, provide an estimate of the amount and severity 
of damage and the impact on the private and public sectors, and provide 
an estimate of the type and amount of assistance needed under the 
Stafford Act. The President determines whether a disaster has caused 
damage of such severity that it is beyond the combined capabilities of 
state, territory, or tribal governments and local governments to 
respond. A major disaster declaration provides a wide range of Federal 
assistance programs for individuals and public infrastructure. See 
Stafford Act section 401 (42 U.S.C. 5170). A similar declaration 
request may be submitted to the President in the event of an emergency 
of such severity and magnitude that effective response is beyond the 
capabilities of the state, territory, or tribal governments. If the 
United States has the primary responsibility for response to an 
emergency, the President may issue an emergency declaration without a 
request from the chief executive of a state, territory, or tribal 
government. See Stafford Act section 501 (42 U.S.C. 5191).\2\
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    \1\ In rare catastrophic events, the PDA may not be completed 
before the disaster is declared. Tribal governments may seek 
assistance either under a state declaration request or tribal 
leaders may independently choose to request a major disaster 
declaration from the President.
    \2\ More information about the process for declaring major 
disasters or emergencies under the Stafford Act can be found at 44 
CFR 206.31 et seq. and on the FEMA website: https://www.fema.gov/disasters/how-declared. It is rare for the President to declare an 
emergency without a request from a state, territory, or tribal 
government. Examples include the bombing of the Alfred P. Murrah 
Federal Building in Oklahoma City in 1995, the loss of the Space 
Shuttle Columbia in 2003, and the COVID-19 pandemic in 2020.
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    Once a declaration is made, affected areas and eligible assistance 
are determined. See 44 CFR 206.40. FEMA announces on its website and in 
the Federal Register whether specific counties, parishes, boroughs, 
tribal lands, or municipalities (counties) within a state that were 
affected by a major disaster are eligible for Federal ``public 
assistance'' and/or ``individual assistance.'' \3\ ``Public 
assistance'' relief is described in Stafford Act sections 406 and 407 
as including Federal assistance to repair, restore, and replace 
disaster-damaged public facilities, which may include debris removal, 
roads and bridges, water control facilities, buildings and equipment, 
utilities, parks, and recreational facilities. 42 U.S.C. 5172 and 5173. 
Emergency protective measures, described in Stafford Act section 403 
(42 U.S.C. 5170b), are actions taken by state, tribal, territorial and 
local governments to meet immediate threats to life and property 
resulting from a major disaster. ``Individual assistance'' relief is 
described in Stafford Act section 408 as Federal assistance to 
individuals and households, including disaster programs for crisis 
counseling, unemployment assistance, legal services, and supplemental 
nutrition assistance. 42 U.S.C. 5174. FEMA defines an ``incident'' as 
any condition which meets the definition of a major disaster or 
emergency under the Stafford Act and which causes damage or hardship 
that may result in a Presidential declaration of a major disaster or an 
emergency. 44 CFR 206.32(e). FEMA also defines an ``incident period'' 
as ``[t]he time interval during which the disaster-causing incident 
occurs.'' 44 CFR 206.32(f).
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    \3\ https://www.fema.gov/disasters/disaster-declarations.
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II. Disaster Relief Under Section 7508A(a)

A. Overview

    Under section 7508A(a), the Secretary has discretionary authority 
to determine which taxpayers can have acts postponed by reason of being 
affected by a Federally declared disaster and to specify both the time-
sensitive acts that are postponed and a period of time that may be 
disregarded, up to one year, in determining whether such acts were 
timely performed. The time-sensitive acts that may be postponed under 
section 7508A(a) include acts due to be performed by taxpayers or the 
government. See Sec.  301.7508A-1(c).
    The term ``Federally declared disaster'' is defined in section 
165(i)(5) as ``any disaster subsequently determined by the President of 
the

[[Page 2609]]

United States to warrant assistance by the Federal Government under the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act.'' The 
Stafford Act does not use the term ``Federally declared disaster.'' It 
uses the defined terms ``emergency'' and ``major disaster'' and also 
uses the generic term ``disaster'' to refer to both emergencies and 
major disasters. See Stafford Act Sec.  101, 42 U.S.C. 5121 (using the 
term ``disaster''); Stafford Act Sec.  102, 42 U.S.C. 5122 (defining 
the terms ``emergency'' and ``major disaster''); H.R. Rep. 93-1037, p. 
26 (May 13, 1974) 120 Cong. Rec. 14156 (clarifying that the term 
``disaster'' as used in the Stafford Act ``includes an emergency or a 
major disaster''). As described above, the declaration of either an 
emergency or a major disaster requires a determination by the President 
that Federal assistance is warranted under the Stafford Act. 
Accordingly, the IRS has previously acknowledged that a Federally 
declared disaster under section 165(i)(5) includes either an emergency 
or a major disaster declared under the Stafford Act. See Rev. Rul. 
2003-29, 2003-11 I.R.B. 587 (Mar. 17, 2003); Rev. Rul. 2002-11, 2002-10 
I.R.B. 608 (Mar. 11, 2002); Rev. Rul. 2001-15, 2001-13 I.R.B. 922 (Mar. 
26, 2001); and Rev. Rul. 2000-15, 2000-12 I.R.B. 774 (Mar. 20, 2000).
    Section 7508A(a) of the Code neither mentions FEMA, nor the concept 
of the ``incident period'' as determined by FEMA. As noted above, 
section 7508A(a) leaves it to the Secretary's discretion to identify 
the period of postponement, that is, the start and end dates of the 
``incident,'' and the type of relief to provide, from a tax 
administration perspective. The Secretary has historically looked to 
FEMA declarations to identify which counties are sufficiently affected 
by a major disaster for the Secretary to exercise the discretion under 
section 7508A(a) to postpone periods of time for the taxpayers in these 
disaster-affected counties to perform certain specified time-sensitive 
tax actions.
    Section 7508A(a) is not self-executing; it does not operate, on its 
own, to postpone any time-sensitive act in the event of a Federally 
declared disaster. Instead, the statute authorizes the Secretary to 
determine who is affected by a Federally declared disaster for purposes 
of section 7508A, what time-sensitive acts performed by these taxpayers 
(or performed by the government with respect to these taxpayers)should 
be postponed, and for what period of time the postponement period 
should run.
    Section 7508(a)(1) enumerates time-sensitive acts that are 
postponed with respect to a taxpayer serving in a combat zone (and 
which the Secretary may postpone with respect to taxpayers affected by 
a Federally declared disaster, via section 7508A(a)(1)). These acts 
include filing any income, estate, gift, employment, or excise tax 
return; making any income, estate, gift, employment, or excise tax 
payment or any installment thereof; filing a petition with the Tax 
Court for redetermination of a deficiency, or for review of a Tax Court 
decision; allowing a credit or refund of any tax; filing a claim for 
credit or refund of any tax; bringing suit upon a claim for credit or 
refund; making an assessment of any tax; giving or making any notice or 
demand for the payment of any tax, or with respect to any liability to 
the United States in respect of any tax; collecting, by levy or 
otherwise, the amount of any liability in respect of any tax; bringing 
suit by the United States, or any officer on its behalf, in respect of 
any liability in respect of any tax; and any other act required or 
permitted under the internal revenue laws specified by the Secretary. 
Additional acts that may be postponed in the event of a Federally 
declared disaster are listed in Rev. Proc. 2018-58, 2018-50 I.R.B. 990, 
which is the current version of a revenue procedure that is updated 
periodically to reflect additional acts or other changes. The revenue 
procedure provides that in order for taxpayers to be entitled to a 
postponement of the time-sensitive acts listed in the revenue 
procedure, the IRS needs to issue guidance providing such relief with 
respect to a Federally declared disaster, typically by cross-
referencing the revenue procedure in an IRS news release. This is the 
case not just for acts listed in the revenue procedure, but for all 
acts listed in section 7508(a)(1). As a result, in the event of a 
Federally declared disaster, the IRS generally issues a news release or 
other guidance identifying the affected taxpayers for purposes of 
section 7508A (typically by reference to counties or states), the time-
sensitive acts postponed, and the period of time for the postponement.

B. Historical Application

    The historical practice before the enactment of section 7508A(d) 
was generally to postpone time-sensitive tax acts under section 
7508A(a) without regard to the latest incident date for a disaster as 
described by FEMA. The postponement period set by the Secretary 
generally began on the earliest incident date specified in a FEMA 
disaster declaration and ended 120 days later, although a longer period 
for relief could be selected if the disaster coincided with any major 
filing deadlines. See IRM 25.16.1.5.2(2) (rev. 06-26-2018) (``The 
severity of the disaster and proximity of tax deadlines are primary 
factors in determining the level of tax relief that is provided.''). 
These postponement periods typically extended more than 60 days after 
the latest incident date specified in a FEMA disaster declaration. For 
example, an end date for the major disaster incident was indicated in 
FEMA's initial disaster declarations for 48 of FEMA's 53 major disaster 
declarations issued for disasters occurring in 2019 and declared before 
December 19, 2019. For these 48 FEMA major disaster declarations in 
2019 with initial ending incident dates assigned to them by FEMA, the 
incident period ranged from one day to 130 days, with a median incident 
period of nine days. For the five 2019-year major disasters where 
FEMA's initial declarations did not specify an end date for the 
disaster, FEMA later amended the declarations to provide an end date to 
the incident period for the disaster. FEMA major disaster declarations 
and any amendments thereto are posted on the FEMA website \4\ and 
published in the Federal Register.
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    \4\ https://www.fema.gov/disasters/disaster-declarations.
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III. Section 7508A(d)

    On December 20, 2019, section 7508A(d) was added to the Code by 
section 205 of the Taxpayer Certainty and Disaster Tax Relief Act of 
2019, enacted as Division Q of the Further Consolidated Appropriations 
Act, 2020, Public Law 116-94, 133 Stat. 2534, 3226 (FCAA). Section 
7508A(d) provides qualified taxpayers a mandatory 60-day period that is 
to be disregarded ``in the same manner as a period specified under 
[section 7508A(a)]'' (mandatory 60-day postponement period). Section 
7508A(d)(1). Section 7508A(d) does not identify the acts for which a 
period is disregarded under section 7508A(a). Section 7508A(d)(4) 
provides that a rule similar to section 7508A(d)(1) applies with 
respect to any person described in section 7508A(b) for certain 
pension-related acts. In contrast to the rest of section 7508A(d), 
section 7508A(d)(4) identifies specific pension-related acts to which 
the mandatory 60-day postponement period provided in section 
7508A(d)(1) applies. In addition, section 7508A(d)(5) coordinates the 
mandatory 60-day postponement period with a period specified by the 
Secretary by providing that the mandatory 60-day postponement period 
with respect to a person (including by reason of the application of 
section 7508A(d)(4)) is in

[[Page 2610]]

addition to (or concurrent with, as the case may be) any period 
specified by the Secretary under section 7508A(a) or (b) with respect 
to such person.
    Because section 7508A(a) does not, on its own, operate to postpone 
any acts, the Secretary must determine which acts to postpone. As a 
result, the requirement in section 7508A(d)(1) that the mandatory 60-
day postponement period be disregarded ``in the same manner as a period 
specified under [section 7508A(a)]'' indicates that the acts covered by 
the mandatory 60-day postponement period under section 7508A(d)(1) must 
also be determined by the Secretary in the manner required under 
section 7508A(a).
    Under section 7508A(d)(5), the mandatory 60-day postponement period 
in section 7508A(d) runs concurrently with the postponement period 
determined by the Secretary under section 7508A(a) if the period 
determined by the Secretary under section 7508A(a) is equal to or 
longer than 60 days. If the Secretary's postponement period under 
section 7508A(a) is less than 60 days, the mandatory 60-day 
postponement period would run concurrently for the length of the 
Secretary's postponement period under section 7508A(a) and then 
continue running in addition to the Secretary's postponement period. 
The mandatory 60-day postponement period generally begins on the 
earliest incident date specified in a FEMA disaster declaration and 
ends on the date which is 60 days after the latest incident date.

IV. Legislative History of Section 7508A(d)

    The legislative history of section 7508A(d) of the Code is sparse. 
There are no House, Senate, or Conference Reports concerning the FCAA. 
The identical text of section 7508A(d) was included in the same session 
of Congress in H.R. 3301, which was not enacted. Before H.R. 3301 was 
set to be marked up by the House Ways and Means Committee on June 30, 
2019, the staff of the Joint Committee on Taxation prepared a partial 
description of proposed section 7508A(d) in JCX 30-19 (June 18, 2019) 
(Joint Committee Report).
    The Joint Committee Report (at 86-87) described twelve categories 
of time-sensitive acts that could be postponed which are performed by 
taxpayers (for example, filing any return or paying any tax) or by the 
IRS (for example, assessment or collection of any tax), which are the 
same eleven items described in section 7508(a)(1)(A)-(K) (for taxpayers 
serving in a combat zone), plus the set of acts regarding pensions that 
are described in Sec.  301.7508A-1(c)(1)(iii). The Joint Committee 
Report did not discuss why section 7508A(d) only refers to the acts 
regarding pensions in section 7508A(d)(4) to be postponed, but not the 
eleven categories of acts described in section 7508(a)(1)(A)-(K). The 
Joint Committee Report also did not discuss the intended meaning of 
section 7508A(d)(1)'s provision that periods of time ``shall be 
disregarded in the same manner as under [section 7508A(a)].''
    As regards the proposed length of the mandatory 60-day postponement 
period, the Joint Committee (at 87) stated only that ``[t]he 60-day 
period begins on the earliest incident date specified in the 
declaration of the relevant disaster and ends on the date which is 60 
days after the latest incident date so specified.'' The Joint Committee 
Report did not refer to or explain how the new proposed section 
7508A(d) might be applied in the event that a declaration did not 
specify an incident date, or in the event of a prolonged and uncertain 
disaster period, such as in the case of a drought or pandemic.
    On January 21, 2020, a month after the enactment of section 
7508A(d), the House Ways and Means Committee released a report on H.R. 
3301, H. Rept. No. 116-379 (2020) (House Committee Report), which 
largely repeated (at 97-100) the explanations previously provided by 
the Joint Committee Report regarding the features of section 7508A(d). 
In this report, the Ways and Means Committee titled the section 
discussing the text of what had been enacted as section 7508A(d), 
``Automatic Extension of Filing Deadlines in Case of Certain Taxpayers 
Affected by Federally Declared Disasters.'' H.R. Rep. No. 116-379, at 
97 (2020). Next, the House Committee Report described the current law 
(prior to enactment of section 7508A(d)), beginning with a discussion 
of the filing deadlines for Federal income tax returns and quarterly 
estimated tax payments, and ending with a listing of all of the items 
in section 7508(a)(1) and section 7508A(a) that the Secretary may 
postpone in the event of a Federally declared disaster. Id. at 97-98. 
Then, the report identified the reason for change as follows:

    The Committee believes that the certainty and additional time 
provided by an automatic extension of filing deadlines for taxpayers 
affected by Federally declared disasters will ease the burden of tax 
compliance for taxpayers dealing with the hardship of disaster 
recovery.

Id. at 99. Again, the House Committee Report only identified an 
automatic extension of filing deadlines as the purpose for the new 
statutory text. However, in the Explanation of Provision section that 
followed, the House Committee Report seems to indicate that the statute 
was meant to postpone all of the deadlines that it had listed in its 
description of current law:

    The provision provides to qualified taxpayers in the case of a 
Federally declared disaster a mandatory 60-day period that is 
disregarded in determining whether the acts listed above were 
performed in the time prescribed; the amount of interest, penalty, 
additional amount, or addition to tax; and the amount of credit or 
refund. The 60-day period begins on the earliest incident date 
specified in the declaration of the relevant disaster and ends on 
the date which is 60 days after the latest incident date so 
specified.

    Id. at 99. The ``Explanation of Provision'' section of the House 
Committee Report is inconsistent with the report's ``Reason for 
Change'' section, and neither section comports with the statutory text 
of section 7508A(d) as enacted, because the statutory text does not 
reference which specified acts (let alone all) are postponed under 
section 7508A(a).

Explanation of Provisions

    The Treasury Department and the IRS have determined it necessary to 
propose regulations addressing the enactment of section 7508A(d) 
because the statutory text is ambiguous in at least two respects. 
First, it is unclear what time-sensitive acts are to be postponed. 
Second, it is unclear how the mandatory 60-day postponement period is 
to be calculated when the declaration specified in section 7508A(d) 
does not contain an incident date. Further, the legislative history 
described in the Background section is insufficient to explain these 
areas of ambiguity. The Treasury Department and the IRS have also 
determined it necessary to propose regulations addressing the ambiguity 
between the different terms used in the Code and in the Stafford Act to 
refer to disasters determined by the President to warrant Federal 
assistance. This Explanation of Provisions section discusses the 
proposed regulations addressing each of these areas of ambiguity.

I. Time-Sensitive Tax Acts

    Section 7508A(d) provides a mandatory 60-day period during which 
qualified taxpayers will receive disaster relief. 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

[[Page 2611]]

7508A(d)(1), however, provides that this mandatory 60-day postponement 
period ``shall be disregarded in the same manner as a period specified 
under [section 7508A(a)].'' Section 7508A(a) is not self-executing. 
Rather, it requires the Secretary to determine whether a taxpayer is 
affected by a Federally declared disaster for purposes of section 
7508A(a), whether any time-sensitive tax acts are to be postponed for 
such taxpayers, and the duration of such postponement. Section 
7508A(d)(1)'s reference to section 7508A(a) thus requires a 
determination by the Secretary of the time-sensitive tax acts, if any, 
to be postponed under section 7508A(a). Therefore, these proposed 
regulations provide that the Secretary's determination under section 
7508A(a) of the acts subject to postponement due to a Federally 
declared disaster is an essential prerequisite to determining the acts 
to which the mandatory 60-day postponement period applies with respect 
to that Federally declared disaster for qualified taxpayers.
    There are circumstances when the Secretary has chosen to limit the 
extent to which the discretion to postpone time-sensitive acts under 
section 7508A(a) might otherwise be exercised. For example, section 
7508A(a)(1) (through its reference to acts described in section 
7508(a)(1)) lists several time sensitive acts performed by the IRS--not 
by taxpayers--that are available for postponement in the event of a 
Federally declared disaster, including the assessment of any tax, 
making of notice and demand for payment of any tax, collection of any 
tax, and initiating litigation with respect to any tax liability. 
Although all of these acts can be postponed under section 7508A(a) in 
the same manner as time-sensitive acts performed by taxpayers, the 
Secretary rarely chooses to postpone them. Over the past 20 years, 
time-sensitive government acts were only postponed under section 
7508A(a) in connection with four Federally declared disasters: the 
September 11, 2001 terrorist attacks (Notice 2001-68, 2001-47 I.R.B. 
504), Hurricane Katrina (Notice 2005-66, 2005-40 I.R.B. 620 and Notice 
2005-81, 2005-47 I.R.B. 977), Hurricane Rita (Notice 2005-82, 2005-47 
I.R.B. 978), and the COVID-19 pandemic (Notice 2020-23, 2020-18 I.R.B. 
742). The statutory text of section 7508A(d) provides no indication 
that Congress intended to postpone all time-sensitive acts for which 
relief potentially could be provided under section 7508A(a), including 
those acts due to be performed by the government with respect to a 
qualified taxpayer. It has generally not been the practice of the 
Secretary to exercise all of the authority given under section 7508A(a) 
to postpone all time-sensitive government acts with respect to 
taxpayers affected by a Federally declared disaster.
    The Secretary generally also chooses not to exercise the discretion 
under section 7508A(a) with respect to many time-sensitive acts carried 
out by taxpayers. For example, section 7508(a)(1)(A)-(B) and section 
7508A(a)(1) combine to provide, among other things, that the Secretary 
has the discretion to specify a period of up to one year that may be 
disregarded in determining whether an affected taxpayer with respect to 
a qualifying disaster has timely filed any return of income tax or paid 
the United States any employment or excise taxes. The Secretary may 
exercise the discretion under section 7508A(a) to not provide 
postponement periods for the filing of certain information returns with 
respect to income, such as Forms W-2 (Wage and Tax Statement) and forms 
in the 1099 series. These information returns with respect to income 
are required by most income tax filers in order to timely prepare their 
own income tax returns, such as Forms 1040 (U.S. Individual Income Tax 
Returns) or Forms 1120 (U.S. Corporation Income Tax Returns). These 
information returns may also be used by the IRS to verify withheld 
amounts that were claimed on an income tax return before tax refunds 
are issued. As a result, for tax administration reasons, the Secretary 
generally does not postpone the time-sensitive acts of filing and 
furnishing these information returns, except for certain information 
returns relating to individual retirement accounts (IRAs) and certain 
other tax-exempt accounts.
    Finally, the Secretary may choose not to provide any relief under 
section 7508A in response to a Federally declared disaster. For 
example, when a disaster is eligible for assistance that is limited to 
only the clean-up of public property or other short-term public 
services, the Secretary may determine that relief is not warranted 
under section 7508A.
    For the foregoing reasons, these proposed regulations 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 the Secretary'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 the 
Secretary determines not to postpone a time-sensitive act pursuant to 
the 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), then none will be 
postponed under section 7508A(d).

II. Calculation of the Mandatory 60-Day Postponement Period

    The earliest and latest incident dates referred to in subsections 
7508A(d)(1)(A)-(B) for a Federally declared disaster are the dates for 
these events set forth in the declaration establishing the Federally 
declared disaster for purposes of section 7508A. In the circumstances 
where there is a certain event with an incident date or incident dates 
stated in the declaration, as described in Examples (1)-(3) of the 
proposed regulation, the period described in section 7508A(d)(1) will 
generally run concurrently with the discretionary periods specified by 
the Secretary under section 7508A(a) or (b), when the postponement 
period provided by the Secretary is equal to or greater than 60 days. 
(As explained previously, the postponement period provided by the 
Secretary is generally 120 days.) If the postponement period provided 
by the Secretary is less than 60 days, then section 7508A(d) would 
apply to provide a mandatory 60-day postponement period, running 
concurrently with the Secretary's postponement period at the start, and 
then after the period prescribed under section 7508A(a) ran out, the 
mandatory period under section 7508A(d) would continue to run for the 
remainder of the 60-day period.
    In flooding, wildfire, or earthquake disasters, it is not unusual 
for FEMA initially to issue a major disaster declaration with no known 
end date for the disaster incident period. However, insofar as Congress 
could have been aware when section 7508A(d) was enacted, these open-
ended disaster incident periods were generally resolved with the 
addition by FEMA of a closing date within a short time (usually less 
than 60 days) after the first reported incident date. Also, it is clear 
from the legislative history that Congress did not anticipate a 
situation such as a pandemic or drought, where the beginning date and 
end dates are not clear, or a situation where the declaration does not 
specify an incident date.
    Ambiguities in applying section 7508A(d) arise when the incident 
date is specified in the declaration as beginning on a certain date but 
remaining open-ended for an extended

[[Page 2612]]

period of time. In those cases, the calculation of the mandatory 60-day 
postponement period could result in a prolonged postponement of 
specified time-sensitive acts that could span well beyond the one-year 
discretionary period authorized under section 7508A(a). It defies logic 
for the Secretary's discretionary postponement period under section 
7508A(a) to be limited to ``a period of up to 1 year,'' and there be no 
limit on the mandatory 60-day postponement period under section 
7508A(d). If section 7508A(d) were interpreted as requiring such 
prolonged postponement periods, that interpretation would be contrary 
to the directive of section 7508A(d)(1) that the mandatory 60-day 
postponement period must ``be disregarded in the same manner as a 
period specified under [section 7508A(a)].'' For the foregoing reasons, 
these proposed regulations provide that the phrase ``shall be 
disregarded in the same manner as a period specified under subsection 
(a)'' in section 7508A(d)(1) means that the mandatory postponement 
period cannot exceed the one-year period authorized under section 
7508A(a).
    Further ambiguities arise when the declaration establishing a 
Federally declared disaster for purposes of section 7508A does not 
specify any incident date. Under such circumstances, it is not possible 
to apply the statutory language in section 7508A(d)(1) to provide 
relief ``beginning on the earliest incident date specified in the 
declaration'' and ``ending on the date which is 60 days after the 
latest incident date so specified.'' For that reason, these proposed 
regulations provide that where 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 the Secretary determines to postpone time-sensitive tax 
acts in response to such a declaration, under the discretionary 
authority in section 7508A(a), the only postponement period will be the 
period determined by the Secretary under 7508A(a).
    These proposed regulations 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 Code that automatically arise as a result of a 
Federally declared disaster, such as the loss provisions under section 
165 of the Code.

III. Federally Declared Disasters

    As noted above, the term ``Federally declared disaster'' is defined 
in section 165(i)(5) as ``any disaster subsequently 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.'' The term ``Federally declared disaster'' does not 
appear in the Stafford Act, but the term ``disaster'' is used in the 
Stafford Act to refer to either an ``emergency'' or a ``major 
disaster'' declared by the President in accordance with the procedures 
contained therein. The use of different terminology between the Code 
and the Stafford Act could cause confusion as to whether a declaration 
of an emergency under the Stafford Act establishes a ``Federally 
declared disaster'' under the Code. Section 165(i)(5) provides that a 
Federally declared disaster is ``any disaster'' that is determined to 
warrant assistance under the Stafford Act. Under the Stafford Act, the 
President can declare either an emergency or a major disaster. There is 
no provision to declare a ``disaster,'' but the term ``disaster'' is 
used in the Stafford Act as an umbrella term that encompasses both an 
emergency and a major disaster. As a result, the term ``any disaster'' 
in section 165(i)(5) encompasses both an emergency and a major 
disaster. The IRS has previously acknowledged in multiple Revenue 
Rulings that Federally declared disasters include either an emergency 
or a major disaster declared under the Stafford Act. See Rev. Rul. 
2003-29, 2003-11 I.R.B. 587 (Mar. 17, 2003); Rev. Rul. 2002-11, 2002-10 
I.R.B. 608 (Mar. 11, 2002); Rev. Rul. 2001-15, 2001-13 I.R.B. 922 (Mar. 
26, 2001); and Rev. Rul. 2000-15, 2000-12 I.R.B. 774 (Mar. 20, 2000). 
These proposed regulations formalize that clarification by amending the 
definition of ``Federally declared disaster'' in Sec.  1.165-11(b)(1) 
of the Income Tax Regulations to specifically provide that the term 
``Federally declared disaster'' includes both a major disaster declared 
under section 401 of the Stafford Act and an emergency declared under 
section 501 of the Stafford Act.

IV. The COVID-19 Pandemic

    The disaster relief provided under section 7508A in response to the 
COVID-19 pandemic illustrates some of the provisions in these proposed 
regulations. The COVID-19 pandemic became a Federally declared disaster 
for purposes of section 7508A on March 13, 2020, when the President 
issued his nationwide emergency declaration under section 501(b) of the 
Stafford Act.\5\ In response to that declaration, 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. Those determinations were reflected in several notices 
released to the public beginning in late March. Notice 2020-17 was 
issued on March 18, 2020,\6\ Notice 2020-18, superseding Notice 2020-
17, was issued on March 20, 2020,\7\ Notice 2020-20, amplifying Notice 
2020-18, was issued on March 27, 2020,\8\ and Notice 2020-23, 
amplifying Notices 2020-18 and 2020-20, was issued on April 9, 2020.\9\ 
Additional notices continued to be released thereafter, as the 
Secretary continued to exercise his discretionary authority under 
section 7508A(a) and (b) in response to the President's March 13 
declaration, including a joint notice with the Department of Labor 
published on May 4, 2020,\10\ and Notice 2020-35, issued on May 28, 
2020.\11\ Because the President's March 13 emergency 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).
---------------------------------------------------------------------------

    \5\ https://www.whitehouse.gov/briefings-statements/letter-president-donald-j-trump-emergency-determination-stafford-act/.
    \6\ 2020-15 I.R.B. 590 (April 6, 2020).
    \7\ 2020-15 I.R.B. 590 (April 6, 2020).
    \8\ 2020-16 I.R.B. 660 (April 13, 2020).
    \9\ 2020-18 I.R.B. 742 (April 27, 2020).
    \10\ 85 FR 26351 (May 4, 2020).
    \11\ 2020-25 I.R.B. 948 (June 15, 2020).
---------------------------------------------------------------------------

    Subsequent to the President's March 13 nationwide emergency 
declaration, beginning on March 20, 2020, and continuing on almost a 
daily basis until April 13, 2020, the President 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 no period for performing such acts is in fact 
disregarded under section 7508A(a) in

[[Page 2613]]

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.

Applicability Date

    Section 7805(b)(1)(A) and (B) of the Code generally provide that no 
temporary, proposed, or final regulation relating to the internal 
revenue laws may apply to any taxable period ending before the earliest 
of (A) the date on which such regulation is filed with the Federal 
Register, or (B) in the case of a final regulation, the date on which a 
proposed or temporary regulation to which the final regulation relates 
was filed with the Federal Register. However, section 7805(b)(2) 
provides that regulations filed or issued within 18 months of the date 
of the enactment of the statutory provision to which they relate are 
not prohibited from applying to taxable periods prior to those 
described in section 7805(b)(1). As noted above, section 7508A(d) was 
enacted on December 20, 2019, as part of the FCAA.
    Accordingly, as provided in section 7805(b)(2) of the Code, these 
proposed regulations are proposed to apply to disasters declared on or 
after December 21, 2019.

Special Analyses

    Certain IRS regulations, including these, are exempt from the 
requirements of Executive Order 12866, as supplemented and affirmed by 
Executive Order 13563. Therefore, a regulatory assessment is not 
required.
    Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it 
is hereby certified that these proposed regulations will not have a 
significant economic impact on a substantial number of small entities. 
The proposed regulations clarify how the Secretary may postpone certain 
time-sensitive tax deadlines by reason of a Federally declared 
disaster. Such postponements provide more time for affected taxpayers 
to complete time-sensitive acts than they otherwise would have under 
the internal revenue laws. In addition, the proposed regulations would 
not impose a collection of information on any person, including small 
entities, for purposes of the Regulatory Flexibility Act (5 U.S.C. 
chapter 6). Accordingly, the Secretary certifies that the regulations 
will not have a significant economic impact on a substantial number of 
small entities.
    Pursuant to section 7805(f) of the Internal Revenue Code, the IRS 
will submit the proposed regulations to the Chief Counsel for the 
Office of Advocacy of the Small Business Administration for comments on 
the regulations' impact on small businesses.

Comments and Request for a Public Hearing

    Before these proposed regulations are adopted as final, 
consideration will be given to comments that are submitted timely to 
the IRS as prescribed in the preamble under the ADDRESSES section. The 
Treasury Department and the IRS request comments on all aspects of the 
proposed regulations. Any electronic comments submitted, and to the 
extent practicable any paper comments submitted, will be made available 
at www.regulations.gov or upon request.
    A public hearing will be scheduled if requested in writing by any 
person who timely submits electronic or written comments. Requests for 
a public hearing are also encouraged to be made electronically. If a 
public hearing is scheduled, notice of the date and time for the public 
hearing will be published in the Federal Register. Announcement 2020-4, 
I.R.B. 2020-17, provides that until further notice, public hearings 
conducted by the IRS will be held telephonically. Any telephonic 
hearing will be made accessible to people with disabilities.

Drafting Information

    The principal author of these regulations is William V. Spatz of 
the Office of Associate Chief Counsel (Procedure and Administration). 
However, other personnel from the Treasury Department and the IRS 
participated in the development of the regulations.

List of Subjects

26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

26 CFR Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income 
taxes, Penalties, Reporting and recordkeeping requirements.

Proposed Amendments to the Regulations

    Accordingly, 26 CFR parts 1 and 301 are proposed to be amended as 
follows:

PART 1--INCOME TAXES

0
Paragraph 1. The authority citation for part 1 continues to read in 
part as follows:

    Authority:  26 U.S.C. 7805 * * *

0
Par. 2. Section 1.165-11 is amended by revising paragraph (b)(1) to 
read as follows:


Sec.  1.165-11   Election to take disaster loss deduction for preceding 
year.

* * * * *
    (b) * * *
    (1) A federally declared disaster means any disaster subsequently 
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 (Stafford Act). A federally declared 
disaster includes both a major disaster declared under section 401 of 
the Stafford Act and an emergency declared under section 501 of the 
Stafford Act.

PART 301--PROCEDURE AND ADMINISTRATION

0
Par. 3. The authority citation for part 301 continues to read in part 
as follows:

    Authority:  26 U.S.C. 7805 * * *

0
Par. 4. Section 301.7508A-1 is amended by revising paragraph (g) and 
adding paragraph (h) to 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.

* * * * *
    (g) Mandatory 60-day postponement--(1) In general. In addition to 
(or concurrent with) the postponement period specified by the Secretary 
in an exercise of the authority under section 7508A(a) to postpone 
time-sensitive acts by reason of a Federally declared disaster, 
qualified taxpayers (as defined in section 7508A(d)(2)) are entitled to 
a mandatory 60-day postponement period during which the time to perform 
those time-sensitive acts is disregarded in the same manner as under 
section 7508A(a). A similar rule applies with respect to a postponement 
period specified by the Secretary under section 7508A(b), to postpone 
acts as provided in section 7508A(d)(4). Except for the acts set forth 
in paragraph (g)(2) of this section, section 7508A(d) does not apply to 
postpone any acts.
    (2) Acts postponed. The time-sensitive acts that are postponed for 
the mandatory 60-day postponement period are the acts determined to be 
postponed by the Secretary's exercise of authority under section 
7508A(a) or (b). In addition, in the case of any person described in 
7508A(b), the time-sensitive acts postponed for the mandatory 60-day 
postponement period include those described in section 7508A(d)(4):
    (i) Making contributions to a qualified retirement plan (within the 
meaning of

[[Page 2614]]

section 4974(c)) under section 219(f)(3), 404(a)(6), 404(h)(1)(B), or 
404(m)(2);
    (ii) Making distributions under section 408(d)(4);
    (iii) Recharacterizing contributions under section 408A(d)(6); and
    (iv) Making a rollover under section 402(c), 403(a)(4), 403(b)(8), 
or 408(d)(3).
    (3) Calculation of mandatory 60-day postponement period--(i) In 
general. The mandatory 60-day postponement period begins on the 
earliest incident date specified in a disaster declaration for a 
Federally declared disaster and ends on the date that is 60 days after 
the latest incident date specified in the disaster declaration. In 
accordance with section 7508A(d)(5), if the period determined by the 
Secretary in exercising discretion under 7508A(a) is equal to or longer 
than 60 days, the mandatory 60-day postponement period under section 
7508A(d) runs concurrently with the postponement period determined by 
the Secretary under section 7508A(a). If the period determined by the 
Secretary in exercising discretion under 7508A(a) is less than 60 days, 
in accordance with section 7508A(d)(5), the mandatory 60-day 
postponement period will run concurrently for the length of the period 
determined by the Secretary under section 7508A(a) and then continue 
running in addition to the period determined by the Secretary under 
section 7508A(a).
    (ii) Limitations on the mandatory 60-day postponement period. (A) 
In no event will the mandatory 60-day postponement period be calculated 
to exceed one year.
    (B) In the event the Secretary determines to postpone time-
sensitive acts pursuant to a declaration establishing a Federally 
declared disaster for purposes of section 7508A that does not specify 
an incident date, there is no mandatory postponement period under 
section 7508A(d). In such cases, the only postponement period will be 
the period determined by the Secretary under 7508A(a).
    (5) Examples. The rules of this paragraph (g) are illustrated by 
the following examples:
    (i) Example (1). Individual A lives in a state that experienced 
severe but isolated tornado damage on March 15. On March 20, FEMA 
issued a Federal Register Notice announcing a major disaster 
declaration approved by the President for the state where Individual A 
lives, describing the incident date for the tornado as March 15. Based 
upon that major disaster declaration, the IRS published a news release 
identifying the taxpayers (by county) affected by the disaster for 
purposes of section 7508A and specifying the time-sensitive acts that 
are postponed and a period of postponement from March 15 through July 
31, pursuant to section 7508A(a). Under section 7508A(d), the mandatory 
60-day postponement period that Individual A is entitled to begins on 
March 15 and ends 60 days after March 15, on May 14. The mandatory 
postponement period applies to the same time-sensitive acts and runs 
concurrently with the relief the IRS provided to Individual A under 
section 7508A(a).
    (ii) Example (2). Individual B lives in a coastal state which 
experienced harmful effects from a hurricane that began to affect the 
weather in his state on August 15 and ceased to be a weather factor in 
his state on August 19. On August 22, FEMA issued a Federal Register 
Notice announcing a major disaster declaration approved by the 
President, determining that the coastline counties in the state where 
Individual B lives were severely affected and that these counties were 
entitled to both individual assistance and public assistance. The major 
disaster declaration specified the earliest incident date for the 
hurricane in the state where Individual B lives as August 15 and the 
latest incident date as August 19. Based upon that major disaster 
declaration, the IRS published a news release identifying the taxpayers 
affected by the disaster for purposes of section 7508A and specifying 
the time-sensitive acts that are postponed and a period of postponement 
from August 15 through December 31, pursuant to section 7508A(a). Under 
section 7508A(d), the mandatory 60-day postponement period that 
Individual B is entitled to begins on August 15 and ends 60 days after 
August 19, on October 18. The mandatory postponement period applies to 
the same time-sensitive acts and runs concurrently with the relief the 
IRS provided to Individual B under section 7508A(a).
    (iii) Example (3). Individual C lives in a state that is 
experiencing multiple ongoing wildfires. On August 14, FEMA issued a 
Federal Register Notice announcing a major disaster declaration 
approved by the President for the state where Individual C lives, 
specifying the earliest incident date for the wildfires as August 14 
and the incident was ongoing. Based upon that major disaster 
declaration, the IRS published a news release identifying the taxpayers 
(by county) affected by the disaster for purposes of section 7508A and 
specifying the time-sensitive acts that are postponed and a period of 
postponement from August 14 through December 15, pursuant to section 
7508A(a). The wildfire disaster remains ongoing, with no ending 
incident date specified, for several months. The IRS publishes a second 
news release postponing the time-sensitive acts through January 15. 
FEMA amends the major disaster declaration to specify the latest 
incident date of November 19. Under section 7508A(d), the mandatory 60-
day postponement period that Individual D is entitled to begins on 
August 14 and ends 60 days after the latest incident date of November 
19. The mandatory postponement period applies to the same time-
sensitive acts and runs concurrently with the relief the IRS provided 
to Individual D under section 7508A(a), and ends on January 18, which 
is 60 days after the latest incident date and three days beyond the 
postponement period specified by the IRS under section 7508A(a) in its 
news release.
    (iv) Example (4). Individual D lives in the United States, which is 
experiencing a nationwide emergency as a result of its residents being 
exposed to a highly infectious and dangerous pandemic disease. On March 
13, the President declared a nationwide emergency under section 501(b) 
of the Stafford Act. The pandemic became a Federally declared disaster 
for purposes of section 7508A on March 13, however, no incident date 
was specified in the President's emergency declaration. Pursuant to the 
President's March 13 emergency declaration, the IRS published several 
notices identifying the taxpayers affected by the disaster for purposes 
of section 7508A and specifying the time-sensitive acts that are 
postponed and a period of postponement that generally ran from April 1 
through July 15, pursuant to section 7508A(a). Because, in this 
circumstance, the emergency declaration pursuant to which the notices 
were published did not specify an incident date, there is no mandatory 
postponement period under section 7508A(d). The only postponement 
period is the period determined by the Secretary pursuant to the 
discretionary authority under section 7508A(a).
    (h) Applicability dates--(1) In general. Except as provided in 
paragraph (h)(2) of this section, this section applies to disasters 
declared after January 15, 2009.
    (2) Paragraph (g). Paragraph (g) of this section applies to 
disasters declared on or after December 21, 2019.

Sunita Lough,
Deputy Commissioner for Services and Enforcement.
[FR Doc. 2021-00185 Filed 1-11-21; 4:15 pm]
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