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Disaster Related Extension of Deadlines Act: What Taxpayers Should Know

Disaster Related Extension of Deadlines Act: What Taxpayers Should Know

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    President Trump has signed the Disaster Related Extension of Deadlines Act (HR 1491) into law, providing additional procedural protections for taxpayers affected by federally declared disasters. The legislation addresses two long-standing issues that often limited relief for disaster victims, even when filing and payment deadlines were postponed by the IRS.

    Key Provisions of HR 1491

    The act makes two important changes:

    • Extends the statute of limitations for refund claims by treating disaster postponement periods as true extensions for refund lookback purposes.
    • Delays IRS payment due notices, prohibiting the IRS from issuing a notice demanding payment until at least 60 days after the end of the disaster postponement period.

    Together, these changes are intended to better align IRS administrative practices with the relief granted to taxpayers following a disaster.

    Impact on Refund Claims

    Generally, taxpayers may file a refund claim within three years of filing a return or two years of paying the tax, whichever is later. The amount that may be refunded is limited to taxes paid during the applicable lookback period.

    Under prior law, disaster-related filing and payment postponements did not extend the lookback period. As a result, taxpayers could lose the ability to claim refunds for excess withholding or estimated tax payments deemed paid as of the original due date, even when IRS deadlines were postponed.

    HR 1491 corrects this issue by allowing the disaster postponement period to be included when calculating the refund lookback window, preserving refund eligibility in affected situations.

    IRS Notice Relief

    The act also prevents the IRS from sending payment due notices during the postponement period and for 60 days thereafter, reducing the likelihood of premature or confusing IRS correspondence.

    Next Steps

    Taxpayers impacted by federally declared disasters should consider consulting with their tax advisors to evaluate how these changes may affect refund claims and filing obligations.

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