S. 1815 / H.R. 3861, the Filing Relief for Natural Disasters Act
Quick Read: The AICPA supports bipartisan legislation (S. 1815 / H.R. 3861) that would allow the Internal Revenue Service (IRS) to extend federal tax relief to impacted areas as soon as the governor of a state declares a disaster or state of emergency and would require an automatic 120 deadline extension (consistent with IRS practice) immediately following a presidential-disaster declaration.
Issue: Natural disasters such as hurricanes, floods, tornados, wildfires, and heat waves regularly affect the Nation at all times of the year, but the process for receiving tax relief from the IRS following a natural disaster can be an arduous one. Currently, IRS authority to grant federal tax relief from failure to file, failure to pay, and debit interest, outlined in Section 7508A of the Internal Revenue Code, is limited to taxpayers affected by federally declared disasters. State governors will issue official disaster declarations promptly, but often presidential disaster declarations by the Federal Emergency Management Agency (FEMA) in those same regions are not declared for days, or sometimes weeks, after the state declaration. Since a majority of state disasters become federally declared disasters, taxpayers and tax practitioners experience unnecessary stress and burden as they wait for issuance of federal tax relief. Waiting on this relief is particularly stressful when natural disasters occur immediately during or before major tax filing seasons and deadlines. This process delays the IRS’s ability to provide federal tax relief to impacted businesses and disaster victims.
Bill Summary: This bill would provide the IRS the authority to postpone federal tax deadlines by reason of state-declared disasters or emergencies. Similar to the IRS’s authority to postpone certain deadlines in the event of a presidentially declared disaster, Congress would extend that limited authority to state-declared disasters and states of emergency. The Governor would declare a disaster or state of emergency and simultaneously submit a written notification to the IRS, specifically including the designated counties. The IRS, upon receipt of notification, would have the authority to grant filing relief to individuals and businesses located in the specified counties. The bill would also expand the mandatory federal filing extension from 60 days to 120 days, which provides taxpayers with additional time to file taxes following a disaster.
AICPA Staff Contact: Lauren Pfingstag, Director, Congressional & Political Affairs, Lauren.Pfingstag@aicpa-cima.com