Interest on Refunds In A Disaster Year

[BobKamman]

If you claim to understand any of this, you should probably consult a mental-health practitioner.

https://www.irs.gov/pub/lanoa/pmta-2021-06.pdf

ISSUES

(1) Do sections 7508A(c) and 7508(b)(2) provide an exception to section 6611(g), which limits the accrual of overpayment interest when a return is not filed in processible form, when an individual taxpayer files a tax return that is timely due to relief granted under section 7508A because of a federally declared disaster or terroristic or military actions?

(2) If an individual taxpayer who qualifies for relief under section 7508A with respect to a return timely obtains an extension pursuant to section 6081 and files the return after the postponed due date but before the extended due date, do the section 7508(b)(2) overpayment interest provisions apply?

CONCLUSIONS

(1) Yes. Section 7508A(c) incorporates the special rule for overpayment interest in section 7508(b). Section 7508(b)(2) provides that when an individual taxpayer qualifies for relief under section 7508A and the taxpayer files a timely return (after taking into account the relevant disregarded period), neither section 6611(b)(3) nor section 6611(e) applies. Section 6611(g) applies only for purposes of sections 6611(b)(3) and 6611(e). Accordingly, section 6611(g) does not apply when sections 6611(b)(3) and 6611(e) do not apply.

(2) No. If an individual taxpayer files a return after the postponed due date (July 15, 2020, for returns that were originally due on April 15, 2020) but before the extended due date, the return is timely by application of section 6081, not section 7508A. Accordingly, section 7508(b) does not apply, and sections 6611(b)(3), 6611(e) and 6611(g) apply to these returns.