Over the holidays, President Trump signed a popular measure that provides administrative relief for victims of federally declared disasters.
Disaster Related Extension of Deadlines Act
The Disaster Related Extension of Deadlines Act (H.R. 1491) was headed up by Representatives Greg Murphy (R-NC) and Jimmy Panetta (D-CA). The act, which passed Congress with unanimous support, makes two key deadline-related changes to aid disaster victims.
First, it extends the “look-back” period for taxpayers to receive a credit or refund for overpayment of tax, to align with a disaster extension. Under IRC § 6511, taxpayers must file credit and refund claims three years from the date their return was filed or two years from the date the tax was paid.
Under prior law, disaster-related extensions did not also extend this look-back period – essentially shortening the period during which a taxpayer could file a claim for credit or refund. The act amends IRC § 7508A to provide that any filing period extension resulting from a federally declared disaster is also treated as an extension of time for filing a claim for credit or refund.
In addition, the act revises requirements for collection notices sent to disaster victims. IRC § 6303 requires that these notices and accompanying demands for payment be mailed to a taxpayer within 60 days of an assessment.
Under prior law, collection notices didn’t account for any disregarded period due to disaster relief when specifying deadlines. This led to taxpayer confusion and concern over notices that included earlier deadlines, according to bill proponents and the Taxpayer Advocate Service. The House Ways and Means Committee contends that in 2023 alone, over a million Californians impacted by natural disasters received notices incorrectly informing them they had to pay taxes in 60 days to avoid a penalty.
The act ensures that notices to disaster victims account for any disregarded period when prescribing a date for payment of tax.
Widespread Support
Ways and Means Committee Chair Jason Smith (R-MO) welcomed the bill’s enactment. “This law ensures Americans can remain focused on rebuilding their lives without the hassle of a premature IRS notice demanding payment or less time to claim a tax refund or credit, resources that could be used to repair damage caused by natural disasters,” he said.
“Disaster victims endure unimaginable challenges as they work to rebuild their lives,” Murphy explained. “The last thing they should worry about is navigating confusing IRS filing requirements. The Disaster Related Extension of Deadlines Act provides individuals with sufficient time to claim tax refunds or credits while ensuring clear communication from the IRS to prevent unnecessary penalties or interest.”
Senators Raphael Warnock (D-GA) and Thom Tillis (R-NC) led the introduction of a companion bill (S.1438). “Georgians impacted by natural disasters should not be racing the clock to get the money they’re owed from the federal government,” said Warnock when the companion bill was introduced in April. And Tillis called the bill “commonsense,” adding that it “ensures disaster victims aren’t penalized for circumstances beyond their control.”
The National Taxpayer Advocate (NTA) noted that many taxpayers will not realize the changes – but they will still have an impact. “[M]aking the world subtly simpler for taxpayers in the aftermath of a disaster can nonetheless improve their lives, taking away one more thing to worry about in an already stressful time,” writes the NTA.
The provisions were also part of the Taxpayer Assistance and Service Act discussion draft, shared by Senate Finance Chair Mike Crapo (R-ID) and Ranking Member Ron Wyden (D-OR) early last year.
Other supporters include the American Institute of CPAs and the National Association of Realtors.
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