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IRS Cannot Extend Statutory Deadlines Beyond What Is Permitted in a Disaster Extension

IRS Cannot Extend Deadlines

Taxpayers frequently ask us if there is any way to extend the 45-day and 180-day deadlines for identifying Replacement Property and completing an IRC Section 1031 Exchange. As a recent IRS letter pointed out, the answer is, “probably not.”

IRC Section 7508A does provide authority for extending certain deadlines, but only if the IRS issues a disaster notice pursuant to a Federally declared disaster, terrorist or military action (declared by the President, not a FEMA declaration). The extensions will be limited to the terms of that specific official IRS disaster notice. These disaster notices are posted on the IRS website https://www.irs.gov/newsroom/tax-relief-in-disaster-situations.

The Internal Revenue Service recently released a letter, INFO 2021-0009, dated May 6, 2021, written to U.S. Rep. Ken Buck from Colorado. The IRS responded to Congressman Buck’s inquiry, on behalf of a constituent, about the possibility of extending IRC Section 1031 Exchange deadlines due to impediments related to the COVID-19 pandemic. The IRS referenced the disaster relief issued last year after President Trump declared a nationwide emergency due to the pandemic. Notice 2020-23 extended certain Section 1031 deadlines to July 15, 2020.

The IRS noted that absent the authority under Section 7508A, the IRS cannot alter the deadlines. Since the deadlines are statutory, it would take an act of Congress to change them.

Should you have any questions about disaster relief, you can learn more on our website https://www.ipx1031.com/disaster-relief-deadline-extensions/  or call one of our IPX1031 Exchange professionals.


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