IRS Issues Final Regulations Governing Deadline Extensions Due to Disasters

On June 11, 2021, the IRS released final regulations on the mandatory 60-day postponement of certain tax-related deadlines due to federally declared disasters, which includes a definition of “federally declared disaster.”

The 60-day timeframe is included in Code §7508A(d), which explains that the period beginning on the earliest incident date for a qualifying disaster and ending 60 days after the latest incident date for said disaster, is disregarded for qualified taxpayers. (However, in no event will the mandatory 60-day postponement period exceed one year.) For these purposes, “qualified taxpayers” include businesses that have a principal place of business in a disaster area (among other individuals).

Per the regulations, the Secretary of the Treasury must determine which deadlines for time-sensitive acts will be extended due to a federally declared disaster (if any). However, time-sensitive acts that are specifically postponed include an extension for making contributions to a qualified retirement plan or IRA, withdrawing excess IRA contributions, re-characterizing IRA contributions, and completing rollovers.

Further, the definition of “federally declared disaster” is clarified for purposes of deadline extension to include both a major disaster and an emergency declared under sections 401 and 501 (respectively) of the Stafford Act.

These final regulations are effective as of June 11, 2021, and employers should be aware of these developments.

Mandatory 60-Day Postponement of Certain Tax-Related Deadlines by Reason of a Federally Declared Disaster Final Regulation »