Regulations Provide Filing Relief if Taxpayer Was in a Combat Zone or Federally Declared Disaster Zone

The BNA Tax and Accounting Center is the only planning resource to offer expert analysis and practice tools from the world's leading tax and accounting authorities along with the rest of the tax...

By Kathleen Ford Bay, Esq.

Potts and Reilly, L.L.P., Austin, TX

The Department of the Treasury has issued an amended Regulation, effective January 15, 2009, for §7508A, Regs. §301.7508A-1. The amended regulation provides postponement relief -- up to one year -- for taxes, interest, and penalties in situations where the taxpayer is affected by a federally declared disaster or a terroristic or military action. As stated in the Regulation, “[t]he postponement of the deadline of a tax-related act does not extend the due date for the act, but merely allows the IRS to disregard a time period of up to one year for performance of the act.”

While the Examples given in the Regulation focus on income taxes, the postponement relief should also be available to estates, non-profits in federally declared disaster zones that need to pay unrelated business income taxes and file informational returns, to individuals filing gift tax returns, and to trusts. Rather than relying on §7508A when sending in a return late, taxpayers should coordinate postponement relief with the IRS, before the due date, if possible.

For more information, in the Tax Management Portfolios, see Peebles and Janes, 822 T.M., Estate, gift, and Generation-Skipping Tax Returns and Audits, and in Tax Practice Series, see ¶6300, Credits, Deferred Tax Payments, and Tax Liabilities.