If enacted, HB3861 will have a significant effect on how tax deadlines are managed in the context of disasters. The legislation will allow for mandatory extensions of up to 120 days for federal tax obligations following a state-declared disaster. This change means that individuals and businesses affected by natural disasters at the state level will gain additional time to meet federal tax reporting deadlines, providing essential relief that is currently only available under federally declared emergencies.
Summary
House Bill 3861, titled the 'Filing Relief for Natural Disasters Act', aims to provide modifications to the Internal Revenue Code of 1986 concerning the postponement of certain tax deadlines in response to state-declared disasters. The bill allows governors to submit requests for extensions on federal tax deadlines, effectively equating the treatment of state-declared disasters with federally declared ones. By doing so, it acknowledges the legitimacy of state-level emergency situations that significantly affect tax compliance and deadlines.
Contention
Notable points of contention surrounding this bill may arise from differing opinions on the effectiveness of extending tax deadlines. Proponents argue that this bill will alleviate pressure on taxpayers who are recovering from natural disasters and need extra time to file their taxes. Conversely, some may question whether extending deadlines could lead to administrative complications or if it could incentivize delays in financial reporting. The bill's broad implications for disaster recovery strategies at the state level will also be a point of discussion among lawmakers.
Filing Relief for Natural Disasters ActThis bill authorizes the Internal Revenue Service (IRS) to postpone federal tax deadlines for taxpayers affected by a qualified state declared disaster, upon written request by the state governor. The bill also increases the automatic extension of federal tax deadlines for certain taxpayers.Under current law, the IRS may postpone federal tax deadlines for taxpayers affected by a federally declared disaster, including (but not limited to) deadlines for (1) filing federal tax returns, (2) paying federal taxes, (3) making retirement plan contributions, and (4) tax assessments and collections.The bill authorizes the IRS to postpone such federal tax deadlines for taxpayers affected by a qualified state declared disaster upon written request by the state’s governor (or the District of Columbia mayor). Under the bill, a state includes the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, and the Northern Mariana Islands.The bill defines qualified state declared disaster as any natural catastrophe, fire, flood, or explosion that causes damage of sufficient severity and magnitude to warrant a request to postpone such federal tax deadlines.Further, under current law, an automatic 60-day extension of such federal tax deadlines applies to certain relief workers, individuals killed or injured as a result of a federally declared disaster, and taxpayers whose principal residence, business, or tax records are located in a federally declared disaster area.The bill increases to 120 days the automatic extension of federal tax deadlines for these taxpayers.