Hurricane Irene relief extends the assessment limitations period

Plain-English summary

This Chief Counsel Advice addresses how Hurricane Irene relief affected the period for assessing tax. The IRS explained that when § 7508A postpones an affected taxpayer's deadline to petition the Tax Court, the assessment limitations period is tolled for the same additional period. In the example provided, a petition deadline postponed from September 29 to October 31, 2011 extended the assessment period by 32 days if no petition was filed.

Ruling snapshot

• Question: How does disaster relief postponing a Tax Court petition deadline affect the assessment period of limitations?
• Outcome: Advice given
• Key authorities: IRC §§ 6213(a), 6501(a), 6503(a)(1), and 7508A; IRS News Release IR-2011-87

Full text (IRS public release)

ID: CCA_2011101413473054 Number: 201144029
Release Date: 11/4/2011
Office: --------------
UILC: 6501.03-02, 7508A.00-00

From: --------------------------
Sent: Friday, October 14, 2011 1:47:53 PM
To: ----------------------
Cc: ----------------------------------
Subject: RE: Presidentially declared disaster effect on ASED -- -----------------------

This email is in response to your question about the effect of the federally declared
disaster for Hurricane Irene on the assessment period of limitations.
While the IRS generally does not postpone under section 7508A the time for the
Government to perform certain acts, the postponement of time for taxpayers to file
petitions to the Tax Court will increase the suspension of the assessment period of
limitations pursuant to section 6503(a)(1) in certain cases.
Section 7508A provides that if a taxpayer is affected by a federally declared disaster,
the IRS may provide a postponement of up to a year for affected taxpayers to perform
certain prescribed acts. The IRS may also provide a postponement for the Government
to perform certain acts. IRS News Release IR-2011-87 for Hurricane Irene provided
taxpayers until October 31, 2011 to perform all time-sensitive acts that would have
otherwise been due between August 27 and October 31, 2011, including the time in
which to file a petition to the Tax Court in response to a statutory notice of deficiency.
The news release did not postpone the due date of any government acts.
The issuance of a statutory notice of deficiency, however, may indirectly affect the
running of the assessment period of limitations due to the tolling that occurs when a
statutory notice of deficiency is issued. The three-year assessment period of limitations
under section 6501(a) is suspended under section 6503(a)(1) during any period during
which the IRS is prohibited from making an assessment of a deficiency, plus 60 days.
Under section 6213(a), the Service is prohibited from assessing a deficiency during the
90-day (or 150 days for persons outside the United States) period after a statutory
notice of deficiency is mailed during which the taxpayer may file a petition to the Tax
Court. The result of these provisions is that the assessment period of limitations is
suspended for 150 days (90 days plus 60 days) if the taxpayer does not file a petition in
response to the statutory notice of deficiency.
The question has arisen as to the impact on the assessment period of limitations if an
affected taxpayer’s time to file a petition to the Tax Court is postponed by the Service’s
grant of relief under section 7508A. Specifically, with respect to the relief granted to
taxpayer’s affected by Hurricane Irene, if a statutory notice of deficiency were issued to a
affected taxpayer before August 27, 2011, such that the 90-day period by which the
taxpayer must otherwise petition Tax Court falls between August 27 and October 31,
2011. In this situation, the assessment period of limitations would be tolled (over and
above the tolling provided for by sections 6503 and 6213) for the same period for which
the affected taxpayer’s time to file a petition is tolled.
For example, if a taxpayer affected by Hurricane Irene was issued a statutory notice of
deficiency on July 1, 2011, the taxpayer would usually have had until September 29,
2011 (90 days) to file a Tax Court petition. The relief for taxpayers affected by Hurricane
Irene postpones the time the taxpayer has to file the petition to October 31, 2011.
Accordingly, if the taxpayer fails to file his Tax Court petition by that date, the IRS’s
assessment period is also extended by the 32 days that the 90-day petition period was
postponed. -----------------------------------------------------------------------------------------------------

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