Recently proposed IRS regulations address the mandatory 60-day extension of certain tax deadlines under the Taxpayer Certainty and Disaster Tax Relief Act of 2019 (Division Q of Pub. L. No. 116-94). The proposal explains which actions are covered by the extension, how the 60-day period is calculated and what is considered a federally declared disaster triggering the extension. Comments on the proposal are due by March 15. A public hearing (by teleconference) is scheduled for March 23.
Internal Revenue Code (IRC) Section 7508A authorizes the Treasury Department to postpone for up to one year certain tax-related deadlines in response to a federally declared disaster. Once the president declares a disaster, Treasury announces which (if any) deadlines are postponed and the length of the postponement. IRC 7508(a)(1) and Rev. Proc. 2018-58 specify the actions for which Treasury can extend deadlines, including the following for retirement plan sponsors and administrators to:
The Taxpayer Certainty and Disaster Tax Relief Act of 2019 added a mandatory 60-day extension of certain deadlines. Under the new law, whenever Treasury issues relief under IRC Section 7508A for a federally declared disaster, the 60-day extension automatically applies to the deadlines for the following retirement-related actions:
The proposal clarifies that the 60-day extension also applies to the deadline for any other tax-related action in IRC Section 7508(a)(1) or Rev. Proc. 2018-58 that Treasury includes in its disaster relief announcement.
The 60-day extension serves as a minimum for actions covered by Treasury’s disaster announcements. Treasury can — and often does — grant a longer delay (up to one year). Under the proposal, the calculation of the 60-day extension depends on the start and end dates for the incident period identified in the disaster declaration. The mandatory extension begins at the start of the incident period, ends 60 days after the last day of the incident period and runs concurrently with the extension otherwise granted by Treasury.
Example. Hurricane Zeta made landfall in Alabama on Oct. 28, 2020. The president declared a major disaster for certain counties in the state, with an incident period from Oct. 28–29. The mandatory 60-day extension ran from Oct. 28 until Dec. 28, 2020 (i.e., 60 days after Oct. 29). However, Treasury granted a longer extension for covered acts until March 1, 2021.
If the declaration specifies an incident period with no end date, the extension is limited to the one-year maximum allowed under IRC Section 7508A. If the disaster declaration doesn’t specify an incident period, the 60-day mandatory extension doesn’t apply.
The proposal clarifies that a “federally declared disaster” means any disaster determined by the president under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. This includes both major disasters and emergencies declared under sections 401 and 501 (respectively) of that act.
The proposed regulations would apply to disasters declared on or after Dec. 21, 2019.