The makings of disaster relief: putting taxes in their proper place.

• Author: Ely, Mark H.

As everyone knows by now, by September 14, the IRS released the broadest disaster relief ever granted, through Notices 2001-61 and 2001-63. Few realize, however, the efforts of the AICPA and other organizations to obtain that relief or the difficulties the IRS and Treasury faced in granting it.

Prior to the enactment of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), Sec. 7508A authorized the Secretary to postpone tax-related due dates for taxpayers determined to be affected by a Presidentially declared disaster for a period of up to 90 days. With the enactment of Section 802 of the EGTRRA, however, the 90-day period of Sec. 7508A was expanded to 120 days. The Senate Amendment to Section 802 (which was not adopted by the Conference Agreement) called for the Secretary to create in the IRS a Permanent Disaster Response Team to assist taxpayers in clarifying and resolving tax matters associated with a Presidentially declared disaster. Historically, disaster relief has been granted on a local basis as the result of natural disasters (such as earthquakes, fires and tornadoes), but never on a national basis or as the result of a man-made disaster.

On September 12, Pam Pecarich, Chair of the AICPA's Tax Executive Committee, sent letters to Treasury Secretary O'Neill and IRS Commissioner Rossotti, urging them to grant broad disaster relief, particularly in light of the September 17 filing deadline. She wrote:

[T]he AICPA strongly recommends that the IRS and Treasury grant an extension from September 17, 2001 ... for any taxpayer nationwide. Furthermore, taxpayers and practitioners in the Presidentially declared disaster areas must be granted substantially more time to meet their tax related deadlines. We strongly urge you to immediately address this very difficult problem for the nation's taxpayers.

Later that day, the Service issued Information Release 2001-79, which stated, in part:

In the aftermath of Tuesday's tragedy, the IRS and Treasury want to assure taxpayers, businesses and tax practitioners that they are working aggressively to issue tax guidance and resolve potential issues. The IRS and Treasury will be announcing payment and filing relief for individual and business taxpayers affected by these attacks. Details will be issued as soon as possible. The IRS and Treasury want to assure the victims, families and others affected by the tragedies in New York and at the Pentagon that the agencies will do everything...