[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cannot be edited or withdrawn.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).
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\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).
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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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