President Trump has signed the Disaster Related Extension of Deadlines Act (HR 1491), which makes two key changes for disaster victims. The act:
- Extends the statute of limitations period for disaster victims to file a refund claim; and
- Prohibits the IRS from mailing a payment due notice to disaster victims until 60 days after the disaster postponement period.
Federal law allows taxpayers to file a refund claim within three years from the time the taxpayer’s return was filed or two years from the time the tax was paid, whichever expires later. However, the amount that may be refunded is limited to the amount of tax paid within the statutory lookback period. The lookback period for taxpayers who file a refund claim within three years of filing the taxpayer’s return is equal to three years plus the period of any extension of time for claiming the return. Otherwise, the lookback period is two years.
Under prior law, disaster postponements were not treated as an “extension,” so even though taxpayers were granted postponements to pay the tax, the lookback period was not extended to include the disaster postponement period. This frequently resulted in taxpayers being unable to claim excess withholding or estimated tax payments which were deemed paid as of the original due date, without regard to the postponement period.
Sign up for Spidell’s 2025/2026 Federal and California Tax Update webinar and get information on the most important issues facing your practice. Click here and register today.
Sign up for Spidell’s Flash E-mail — Get breaking news delivered to your inbox, plus other free analysis and information for tax professionals. Join our community and stay at the top of your game. Click here to sign up.
