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Hurricane Katrina: The Response by the Internal Revenue Service, Date: September 14, 2005 1 (September 14, 2005)

handle is hein.tera/crstax0096 and id is 1 raw text is: Order Code RS22261 September 14, 2005 CRS Report for Congress Received through the CRS Web Hurricane Katrina: The Response by the Internal Revenue Service Erika Lunder Legislative Attorney American Law Division Summary After Hurricane Katrina, the Internal Revenue Service (IRS) announced several tax relief measures to aid affected individuals and businesses. They cover a range of subjects, from postponing deadlines for paying taxes and filing returns for individuals, employee benefit plans and tax-exempt bond issuers, to waiving penalties for certain fuel excise taxes. This report summarizes these measures and discusses the statutory authority for the IRS's actions. The Internal Revenue Service (IRS) has announced several measures intended to provide tax relief to individuals and businesses affected by Hurricane Katrina. Many of the measures involve the IRS extending various deadlines for these taxpayers. The IRS has the authority to do so under IRC § 7508A, which allows the IRS to postpone tax- related deadlines for taxpayers affected by a presidentially-declared disaster.' Specifically, the IRS may extend for up to one year the deadline by which taxpayers must do certain actions, including filing returns and paying taxes (with exceptions, including returns and taxes relating to income tax withheld at source and employment taxes), filing a claim for credit or refund of any tax, and filing a petition with the tax court.2 The IRS has the authority to abate interest and penalties for the period in which the deadline is The actual authority to postpone the deadlines is granted to the Secretary of the Treasury. IRC § 7508A was enacted by the Taxpayer Relief Act of 1997, P.L. 105-34. Prior to its enactment, the IRS was able to provide relief to taxpayers affected by natural disasters by extending the deadline to file certain tax returns and pay certain taxes. IRC §§ 6081 and 6161. Additionally, in the event of a presidentially-declared disaster, interest was abated on the tax that was owed. Former IRC § 6404(h). As discussed in this report, IRC § 7508A provides greater authority than IRC §§ 6081 and 6161. IRC § 7508A also applies to victims of terroristic or military actions. It is similar to IRC § 7508, which allows the IRS to postpone deadlines while a member of the Armed Forces is serving in a combat zone or contingency operation. 2 See IRC § 7508(a). Congressional Research Service oe The Library of Congress

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