Tax Court: Petition Was Timely Filed, Filing Period Subject to 60-Day Disaster Extension

Petitioners were entitled to an automatic, mandatory 60-day postponement period to file their Petition. Therefore, petitioners’ petition was filed timely, according to the Tax Court. (Farah (2024), 162 TC No. 7)

Facts.

The IRS issued a deficiency notice dated December 2, 2019, to petitioners Mohamed K. Abdo and Fardowsa J. Farah. The notice specified March 2, 2020, as the last day to petition the Tax Court for redetermination of the deficiency. The petitioners mailed their petition to the Tax Court on March 17, 2020.

On March 31, 2020, the president issued a major disaster declaration due to the COVID-19 pandemic. This declaration identified the disaster as “beginning on January 20, 2020, and continuing” and covered Ohio, where the petitioners resided when they filed their petition.

On September 2, 2020, the IRS asked the Tax Court to dismiss the petition because it was untimely filed under the relevant regs. The IRS argued that the regs were entitled to deference under Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984), and that the disaster declaration didn’t save the petition because it was untimely filed under the reg’s provisions.

The petitioners contended that the controlling law was Code Sec 7508A(d), which provides a mandatory 60-day extension of certain tax-related deadlines after a federally declared disaster, and that the president’s pandemic disaster declaration automatically extended their filing deadline. The petitioners agreed that Chevron provided the proper framework for the court to review the regulation and agreed that the deadline to file their petition was not extended under the regs. However, petitioners also argued that the petition was timely filed under “all reasonable constructions of Code Sec. 7508A(d)” and because of that Reg § 301.7508A-1(g)(1) and Reg § 301.7508A-1(g)(2) are invalid.

Code is unambiguous, reg is invalid.

The Tax Court found that Code Sec. 7508A(d) is unambiguous and “provides a self-executing postponement period for the filing of a petition with the Court for a redetermination of a deficiency.” Therefore, Reg. § 301.7508A-1(g)(1) and Reg. § 301.7508A-1(g)(2) were invalid to the extent it limits the non-pension related “time-sensitive acts that are postponed for the mandatory 60-day postponement period… [to] the acts determined to be postponed by the Secretary’s exercise of authority under [I.R.C. §] 7508A(a).”

Since the petitioners were entitled to an automatic, mandatory 60-day postponement period their petition was timely filed and the Tax Court had jurisdiction to review the deficiency notice.

For more information about extensions of deadlines for federal disaster victims, including victims of the COVID-19 pandemic, see Checkpoint’s Federal Tax Coordinator ¶ S-8500.