In new final regulations (T.D. 9950), Treasury and the IRS have attempted to resolve ambiguities about when a federally declared disaster will lead to a mandatory 60-day postponement of certain time-sensitive tax-related deadlines. The final regulations adopt, with some changes, proposed regulations issued in January (REG-115057-20).
The mandatory postponement provision, Sec. 7508A(d), was added to the Code in 2019. According to the IRS, the statutory wording is ambiguous in at least two respects, necessitating the issuance of regulations. First, it is unclear from the statute what time-sensitive acts are to be automatically postponed in the event of a federal disaster declaration. Second, it is unclear how the mandatory 60-day postponement period is to be calculated in certain situations. The new regulations generally interpret the scope of Sec. 7508A(d) narrowly.
The new regulations also address an ambiguity between the different terms used in the Code and in the Stafford Disaster Relief and Emergency Assistance Act, P.L. 100-707, to refer to disasters determined by the president to warrant federal assistance. The regulations clarify the definition of “federally declared disaster” (Sec. 7508A’s term), which includes both a major disaster and an emergency declared under Section 401 or 501 of the Stafford Act.
The regulations also provide that the time-sensitive acts that are postponed for the mandatory 60-day postponement period are acts that the Treasury secretary determines are postponed under Sec. 7508A(a) or (b). In addition, in the case of any person described in Sec. 7508A(b) (generally pensions and employee benefit plans), the time-sensitive acts postponed for the mandatory 60-day postponement period include those described in Sec. 7508A(d)(4), which include various contributions, distributions, and rollovers.
In response to written comments on the proposed regulations (REG-115057-20), Treasury and the IRS did not adopt any of the changes suggested by the five commenters, except for modifying one of the examples in the regulations to better illustrate the calculation of the mandatory 60-day postponement.
The final regulations apply to federally declared disasters declared on or after Dec. 21, 2019, the date of enactment of Sec. 7508A(d).
— Dave Strausfeld, J.D., (David.Strausfeld@aicpa-cima.com) is a Tax Adviser senior editor.