PROPOSED REGS ON POSTPONEMENT OF SOME TAX-RELATED DEADLINES.

[Editor's Note: At 74 F.R. 2370-2373, Jan. 15, 2009, the IRS published Treasury Decision 9443 which adopts the the following proposed regs as revised by the Treasury Decision.]

ACTION: Notice of proposed rulemaking.

SUMMARY: This document contains a proposed regulation that proposes to amend existing regulations issued under section 7508A of the Internal Revenue Code (Code). The purpose of the proposed regulation is to clarify rules relating to the postponement of certain tax-related acts by reason of a Presidentially declared disaster or terroristic or military action. The proposed regulation clarifies the scope of relief under section 7508A and specifies that interest may be suspended during the postponement period. These changes are necessary to reflect changes in the law made by the Victims of Terrorism Tax Relief Act and current IRS practice. The proposed regulation will affect taxpayers determined by the Secretary to be affected by a Presidentially declared disaster or terroristic or military action.

DATES: Written or electronically generated comments and requests for a public hearing must be received by October 14, 2008.

ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-142680-06), room 5203, Internal Revenue Service, PO Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-142680-06), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington DC, or sent electronically, via the Federal eRulemaking Portal at www.regulations.gov (IRS REG-142680-06).

FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulation Mary Ellen Keys (202) 622-4570, concerning submission of comments Oluwafunmilayo Taylor, (202) 622-7180 (not toll-free numbers).

SUPPLEMENTARY INFORMATION:

Background

This document contains proposed amendments to the Procedure and Administration Regulations (26 CFR part 301). Section 7508A of the Internal Revenue Code (Code) relates to the postponement of certain tax-related acts by reason of Presidentially declared disaster or terroristic or military action. Section 7508A was added by section 911(a) of the Taxpayer Relief Act of 1997, Public Law 105-34 (111 Stat. 788, 877-78 (1997)) (the 1997 Act), which was effective for any period for performing an act that had not expired before December 5, 1997.

Section 7508A authorizes the Secretary to postpone the deadlines for the performance of certain tax-related acts for taxpayers determined to be affected by a Presidentially declared disaster or a terroristic or military action. Section 301.7508A-1 provides guidance for taxpayers seeking relief under section 7508A.

Since the publication of § 301.7508A-1 on December 14, 2000, section 7508A was amended by the Victims of Terrorism Tax Relief Act of 2001, Public Law 107-134 (115 Stat. 2427, 2433-35 (2002)) (the 2002 Act). The 2002 Act amended the statute by extending the time period during which the Secretary may postpone certain tax-related acts and allowing the Secretary to suspend the accrual of interest, penalties, additional amounts, or additions to the tax during the period of postponement. The proposed regulation incorporates amendments to section 7508A.

Explanation of Provisions

The proposed regulation reflects that the period of time the Secretary may postpone certain tax-related acts has been increased from 90 days to one year. Additionally, the proposed regulation reflects that the Secretary is authorized under section 7508A to suspend interest, penalties, additional amounts, and additions to tax which would normally accrue during the time the tax-related act is postponed. Before the 2002 Act, generally, a taxpayer was responsible for interest that accrued during the postponement period (with a limited exception under former section 6404(h) when the taxpayer received both an extension of time to file under section 6081 and an extension of time to pay under section 6161).

The proposed regulation sets forth how the IRS generally implements postponements of time under section 7508A. The proposed regulation provides, however, that the IRS may grant further relief to taxpayers under section 7508A by revenue ruling, revenue procedure, notice, announcement, news release or other guidance published in the Internal Revenue Bulletin, in addition to that relief provided by the proposed regulation.

The proposed regulation demonstrates that although specific tax-related acts may be due on different dates within the postponement period, the acts may be postponed under section 7508A until the last day of the period. Under the proposed regulation, when an affected taxpayer is required to perform a tax-related act by a due date that falls within the postponement period, the taxpayer is entitled to postponement of the act and is eligible for relief from interest, penalties, additional amounts, and additions to tax during the postponement period.

The proposed regulation provides that the postponement period under section 7508A runs concurrently with extensions of time to file or pay, if any, under other sections of the Code. Thus, when the original due date falls within the postponement period, an affected taxpayer has until the last day of the postponement period to file for an extension of time to file or pay, but any resulting extension runs from the original due date.

The proposed regulation also provides that, where the extended due date, but not the original due date, falls within the postponement period, relief under section 7508A is specific to the type of extension received. Thus, an affected taxpayer who received an extension of time to file, but not an extension of time to pay, is eligible for a postponement of time to file and relief from penalties relating to the failure to file. The taxpayer is not eligible for penalty and interest relief relating to the failure to pay, as the payment due date was not extended.

The regulation also clarifies that a postponement of time under section 7508A to perform a tax-related act does not extend the due date to perform the act, but instead, merely allows the IRS to disregard a time period of up to one year for performance of the act.

Proposed Effective Date

The regulation, as proposed, applies to Presidentially declared disasters or terroristic or military actions occurring on or after the date of publication of a Treasury decision adopting these rules as final regulations in the Federal Register.

Special Analyses

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to this regulation. The regulation does not impose a collection of information requirement on small business entities, thus the Regulatory Flexibility Act (5 U.S.C. chapter 6) does not apply. Pursuant to section 7805(f) of the Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

Comments and Requests for a Public Hearing

Before this proposed regulation is adopted as a final regulation, consideration will be given to any written (a signed original and eight (8) copies) and electronic comments that are submitted timely to the IRS. All comments will be available for public inspection and copying. A public hearing will be scheduled if requested in writing by any person that timely submits comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register.

Drafting Information

The principal authors of this proposed regulation are Melissa Quale and Mary Ellen Keys of the Office of the Associate Chief Counsel (Procedure and Administration).

List of Subjects in 26 CFR Part 301

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

Amendments to the Regulations

Accordingly, 26 CFR part 301 is proposed to be amended as follows:

PART 301 -- PROCEDURE AND ADMINISTRATION

Paragraph 1. The authority citation for part 301 continues to read in part as follows:

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

Par. 2. Section 301.7508A-1 is amended by

      1. Revising the section heading and paragraphs (b) and (e).

§ 301.7508A-1 Postponement of certain tax-related deadlines by reasons of a Presidentially declared disaster or terroristic or military action.

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(b) Postponed deadlines -- (1) In general. In the case of a taxpayer determined by the Secretary to be affected by a Presidentially declared disaster (as defined in section 1033(h)(3)) or a terroristic or military action (as defined in section 692(c)(2)), the Secretary may specify a postponement period (as defined in paragraph (d)(1) of this section) of up to one year that may be disregarded in determining under the internal revenue laws, in respect of any tax liability of the affected taxpayer (as defined in paragraph (d)(1) of this section) --

(i) Whether any or all of the acts described in paragraph (c) of this section were performed within the time prescribed;

(ii) The amount of interest, penalty, additional amount, or addition to the tax; and

(iii) The amount of credit or refund.

(2) Effect of postponement period. When an affected taxpayer is required to perform a tax-related act by a due date that falls within the postponement period, the affected taxpayer is eligible for postponement of time to perform the act until the last day of the period. The affected taxpayer is eligible for relief from interest, penalties, additional amounts, or additions to tax during the postponement period.

(3) Interaction between postponement period and extensions of time to file or pay -- (i) In general. The postponement period under section 7508A runs concurrently with extensions of time to file and pay, if any, under other sections of the Internal Revenue Code.

(ii) Original due date prior to, but extended due date within, the postponement period. When the original due date precedes the first day of the postponement period and the extended due date falls within the postponement period, the following rules apply. If an affected taxpayer received an extension of time to file, filing will be timely on or before the last day of the postponement period, and the taxpayer is eligible for relief from penalties or additions to tax related to the failure to file during the postponement period. Similarly, if an affected taxpayer received an extension of time to pay, payment will be timely on or before the last day of the postponement period, and the taxpayer is eligible for relief from interest, penalties, additions to tax and additional amounts related to the failure to pay during the postponement period.

(4) Due date not extended. The 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. To the extent that other statutes may rely on the date a return is due to be filed, the postponement period will not change the due date of the return.

(5) Additional relief. The rules of this paragraph (b) demonstrate how the IRS generally implements section 7508A. The IRS may determine, however, that additional relief to taxpayers is appropriate and may provide additional relief to the extent allowed under section 7508A. To the extent that the IRS grants additional relief, the IRS will provide specific guidance on the scope of relief in the manner provided in paragraph (e) of this section.

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(d) * * *

(3) Postponement period means the period of time (up to one year) that the IRS postpones deadlines for performing tax-related acts under section 7508A.

(e) Notice of postponement of certain acts. If a tax-related deadline is postponed under section 7508A and this section, the IRS will publish a revenue ruling, revenue procedure, notice, announcement, news release, or other guidance in the Internal Revenue Bulletin (see § 601.601(d)(2) of this chapter) describing the acts postponed, the postponement period, and the location of the covered disaster area. Guidance under this paragraph (e) will be published as soon as practicable after the occurrence of a terroristic or military action or declaration of a Presidentially declared disaster.

(f) Examples. The rules of this section are illustrated by the following examples: