U.S. Rep. Greg Murphy (R-NC) said his legislation extending the eligibility for tax refunds and credits for victims of disasters passed out of the House Ways and Means Committee.
The legislation would ensure disaster victims are eligible for tax refunds and credits for three years after a postponed filed deadline. The legislation also extends the deadline for demanding payments when the IRS postpones a payment deadline.
“Disaster victims face unbelievable hardship while restoring their lives after a tragedy,” Murphy said. “The last thing folks who have had their lives upended by an emergency need to deal with is jumping through confusing hoops imposed by the IRS. The Disaster Related Extension of Deadlines Act ensures individuals have ample time to receive a tax refund or credit and the IRS communicates effectively to filers to prevent unintended delinquency on accrued interest or penalties.”
Currently, the taxpayers are afforded a “lookback period” of up to three years to claim credits or refunds. However, that period does not consider the status of filers who may have postponed their filing due to a disaster declaration. Similarly, the IRS issues a “notice and demand” to inform filers of any payments they may owe by the original deadline but waits until the postponed deadline to make a payment. Murphy said the system creates unnecessary confusion and stress for disaster victims
The legislation, H.R. 1491, or the Disaster Related Extension of Deadlines Act, requires the IRS to extend the claim deadline and postponed filing deadline together, as well as tie the deadline for mailing a “notice and demand” to the postponed filing deadline for those who filed prior to the postponed deadline.
“Currently, taxpayers who receive an extension have extra time to claim tax credits and refunds, but those whose filing deadlines were postponed due to a disaster do not receive the same consideration,” U.S. Rep. Jimmy Panetta (D-CA), one of the bill’s co-sponsors said. “Our bipartisan Disaster Related Extension of Deadlines Act ensures that families and small businesses recovering from disasters have the additional time they need to claim this financial relief.”