Interest and Penalties for Taxpayers Affected by Natural
Disasters Are Not Always Prevented or Abated
September 2003
Reference
Number: 2003-10-218
This report has cleared the Treasury Inspector General for Tax Administration disclosure review process and information determined to be restricted from public release has been redacted from this document.
September
29, 2003
MEMORANDUM FOR
COMMISSIONER, SMALL BUSINESS/SELF-EMPLOYED DIVISION
FROM: Gordon C. Milbourn III /s/ Gordon C. Milbourn III
Assistant Inspector General for Audit (Small Business and
Corporate Programs)
SUBJECT: Final Audit Report - Interest and
Penalties for Taxpayers Affected by Natural Disasters Are Not Always Prevented
or Abated (Audit # 200310009)
This
report presents the results of our review of Internal Revenue Service (IRS)
actions to provide tax relief to individual taxpayers affected by natural
disasters. The overall objective of
this review was to determine the effectiveness of IRS actions to prevent or
abate interest and penalty assessments for individual taxpayers granted filing
and payment extensions in Presidentially declared disaster areas.
The
IRS has the authority to grant extensions to file returns and pay taxes for
taxpayers located in disaster areas.
For disasters occurring before September 11, 2001, where the President
also declared a Federal disaster for the area, Internal Revenue Code (I.R.C.)
Section (§) 6404(h) required the IRS to abate any interest that would otherwise
accrue for the disaster extension period.
To provide this tax relief, the IRS developed a computer application to
identify affected taxpayers who reside in these disaster areas, based on their
zip codes. The programming prevents
interest and penalties from accruing, suppresses the issuance of certain
notices, and causes a disaster indicator to be placed on affected taxpayers’
accounts during the disaster period.
Otherwise, interest and penalties would be assessed and then later
abated after it was determined that the taxpayer was affected by the disaster.
In
summary, many taxpayers residing in the Federal disaster areas we reviewed were
not provided the disaster relief that IRS management intended. We identified seven disasters where the IRS
granted an extension that included April 16, 2001.
We analyzed a statistical sample of 461
individual taxpayer accounts coded for these disasters where there were
assessments of penalties and interest and the taxpayer had filed after April
16, 2001. In 107 of these 461 accounts,
taxpayers did not receive the interest and penalty relief they were entitled
to, and interest assessments or accruals totaling $13,766 had not been
abated in accordance with I.R.C. § 6404(h).
Based on the total population of 170,009 taxpayer accounts with
assessments of interest and/or penalties that were coded for relief for the 7
disasters, we estimate that $5.1 million in interest was incorrectly assessed
or accrued on 39,460 taxpayer accounts and should be abated. Inappropriate Failure to File (FTF) and/or
Failure to Pay (FTP) penalties totaling $15,123 were reflected
on 84 of
the 461 taxpayer accounts. Based on the
total population of 170,009 taxpayer accounts coded for relief for the 7
disasters, we estimate that $3.3 million in FTF penalties were inappropriately
assessed on 11,063 taxpayer accounts, and $2.3 million in FTP penalties were
inappropriately assessed or accrued on 28,765 taxpayer accounts.
We
determined that in most of these accounts, interest and/or penalty assessments
and accruals were not accurate because the incorrect disaster period beginning
or ending dates were input. This
occurred because the IRS’ Modernization, Information Technology and Security
(MITS) Services computer programmers used the IRS disaster declaration
memoranda to determine which dates to input; however, the memoranda did not
clearly identify the dates for which IRS management intended to suspend
interest and penalties on taxpayers’ accounts.
As a result, the computer programmers input incorrect disaster period
beginning dates or ending dates. MITS Services programmers advised that sometime after the period
covered by our review, they began informally requiring an e-mail from the
National Disaster Assistance Program Manager that specifically details the disaster
period beginning and ending dates that IRS management wants input for the
disaster coding.
To
prevent input errors in the future, we recommended that Small Business/ Self-Employed
(SB/SE) Division management formalize the practice of providing MITS Services
programmers with the specific disaster period beginning and ending dates for
input to the disaster program, and that SB/SE Division Compliance Policy
management develop procedures to test disaster programming output to ensure
that the program is working as management intended. In addition, for the seven disasters reviewed in this audit,
SB/SE Division management should identify taxpayer accounts where the disaster
extension was intended but not provided, and take appropriate action to abate
or refund interest and penalties assessed, or to correct interest and penalty
accruals on the accounts.
Management’s Response: SB/SE
Division management agreed with our recommendations. SB/SE Division management advised that since the Disaster
Assistance and Emergency Relief Program was transferred to the SB/SE Division
in October 2002, all disaster relief memoranda contain the specific beginning
and ending dates for filing and payment relief and are distributed to each
operating division, including MITS Services. SB/SE Division Disaster
Assistance Program management has procedures in place to test programming prior
to Master File input and will develop a process to test the output programming
to ensure taxpayers receive the relief intended. In addition, SB/SE Division Compliance function management has
initiated steps to identify affected taxpayers for the seven disasters included
in this review and plans to take actions to correct the taxpayers’ accounts and
issue refunds, if appropriate. Management’s complete response to the draft
report is included as Appendix VI.
Copies
of this report are also being sent to the IRS managers who are affected by the
report recommendations. Please contact
me at (202) 622-6510 if you have questions or Daniel R. Devlin, Assistant
Inspector General for Audit (Headquarters Operations and Exempt Organizations
Programs), at (202) 622-8500.
Appendix I – Detailed Objective, Scope, and Methodology
Appendix II – Major Contributors to This Report
Appendix III – Report Distribution List
Appendix IV – Outcome Measures
Appendix V – Presidentially Declared Disasters Included
in This Review
Appendix VI – Management’s Response to the Draft Report
Natural disasters, such as floods or hurricanes, generally affect a limited number of taxpayers in a concentrated geographical area, but they can have devastating effects on taxpayers both emotionally and financially. The Internal Revenue Code (I.R.C.) authorizes the Internal Revenue Service (IRS) to grant extensions to file tax returns and pay taxes, to waive penalties, and to abate interest in certain circumstances, including natural disasters. Although not legally required to, the IRS can use its authority under I.R.C. Sections (§§) 6081 and 6161 to postpone the deadlines for filing tax returns and paying taxes for taxpayers who live in natural disaster areas. For disasters occurring before September 11, 2001, if the President of the United States declared an area a Federal disaster area, and if the IRS exercised its authority under I.R.C. §§ 6081 and 6161, then I.R.C. § 6404(h) required that the IRS abate any interest that would accrue during the extension period for affected taxpayers.
To provide this tax relief, the IRS developed a computer application to identify affected taxpayers who reside in these disaster areas, based on their zip codes. The IRS uses special transaction codes that mark taxpayers’ accounts for disaster processing. The disaster information posted to taxpayers’ accounts includes the disaster period beginning date, the disaster period ending date, and the unique four-digit Federal Emergency Management Agency (FEMA) Contract Number. These disaster codes prevent interest and penalties from accruing, suppress the issuance of certain notices, and cause an indicator to be placed on affected taxpayers’ accounts during the disaster period. The purpose of the indicator is to alert IRS employees to the taxpayers’ disaster status.
For individual taxpayer accounts, if the taxpayer’s original filing and payment due dates fall within the disaster tax relief period, the disaster coding should prevent the accrual of the Failure to File (FTF) penalty, the Failure to Pay (FTP) penalty, and interest on the account from the disaster period beginning date to the disaster period ending date. Otherwise, interest and penalties would be assessed and then later abated after it was determined that the taxpayer was affected by the disaster.
To provide additional assurance that affected taxpayers obtain the tax relief they are entitled to, the IRS provides information to taxpayers so they are aware they may qualify for relief. Notices included with mailings to taxpayers in the disaster areas instruct the taxpayers to contact the IRS if they are having difficulty meeting their income tax obligations due to the disaster. IRS employees are instructed to manually input the disaster coding for these taxpayers.
We limited our tests to individual taxpayer accounts because individuals are affected the most by natural disasters. Accordingly, we reviewed individual accounts coded for Presidentially declared disasters with disaster extensions that included April 16, 2001, and for which the taxpayers filed late.
Responsibility for the IRS’ Disaster Assistance Program was transferred from the Wage and Investment (W&I) Division to the Small Business/Self-Employed (SB/SE) Division in October 2001. We performed audit work from January through July 2003 in the SB/SE Division Headquarters in Washington, D.C.; the SB/SE Division Penalty and Interest Office in Ogden, Utah; and the W&I Division Headquarters in Atlanta, Georgia, in accordance with Government Auditing Standards. Detailed information on our audit objective, scope, and methodology is presented in Appendix I. Major contributors to the report are listed in Appendix II. Details of the disasters included in our review are identified in Appendix V.
To help protect taxpayers’ rights and reduce the burden on affected taxpayers, IRS management developed a written policy to prevent the assessment of interest and penalties related to filing and payment extensions granted during the period immediately following the declaration of a Federal disaster area. However, many taxpayers residing in the Federal disaster areas we reviewed were not provided the disaster relief that IRS management intended. Specifically, the IRS did not always prevent or abate interest and penalties for these taxpayers.
We reviewed the accounts of 461 taxpayers, living in 7 Federal disaster areas, for which interest and/or penalties were assessed. We determined that 109 taxpayer accounts contained various combinations of the following interest and penalty errors:
· For 107 of the 461 accounts, taxpayers did not receive the interest and penalty relief they were entitled to because interest assessments or accruals totaling $13,766 had not been abated in accordance with I.R.C. § 6404(h). Based on the total population of 170,009 taxpayer accounts with assessments of interest and/or penalties that were coded for relief for the 7 disasters, we estimate that $5.1 million in interest was incorrectly assessed or accrued on 39,460 taxpayer accounts and should be abated.
· For 84 of the 461 taxpayer accounts, there were inappropriate FTF and/or FTP penalties assessed and/or accrued, totaling $15,123. In each of these cases, the IRS had exercised its authority under I.R.C. §§ 6081 and 6161 to postpone the deadlines for filing tax returns and paying taxes for taxpayers who live in Federal disaster areas. Based on the previously mentioned total population of 170,009 taxpayer accounts, we estimate that $3.3 million in FTF penalties were inappropriately assessed for 11,063 taxpayer accounts, and $2.3 million in FTP penalties were inappropriately assessed or accrued for 28,765 taxpayer accounts.
Using incorrect disaster period dates resulted in
erroneous interest and penalty assessments and accruals
We determined that interest and penalty assessments and accruals were not accurate because the incorrect disaster period beginning or ending dates were input. This occurred because the IRS Modernization, Information Technology and Security (MITS) Services computer programmers used the IRS disaster declaration memoranda to determine which dates to input; however, the memoranda did not clearly identify the dates for which IRS management intended to suspend interest and penalties on taxpayers’ accounts. As a result, the computer programmers input incorrect disaster period beginning or ending dates.
· In 77 of the 109 taxpayer accounts where disaster relief was not provided as intended, MITS Services programmers did not use the correct disaster period beginning dates. The disaster period beginning dates the programmers input to the computer systems were after April 16, 2001. As a result, IRS computers did not recognize that the taxpayers’ original due dates for filing their returns and paying their taxes came after the beginning of the Federal disaster period. Therefore, the disaster coding on the accounts was ignored for the interest and penalty computations. These accounts contained $25,532 of inappropriate assessments or accruals of interest and/or penalties.
Our comparison of the disaster declaration memoranda used to identify the applicable disaster relief periods and taxpayers’ accounts showed that:
Ø For 74 of the 77 instances, the date the President declared the area a disaster for Federal assistance was used as the disaster period beginning date instead of the date that IRS management intended the disaster relief to start. As a result, the disaster period beginning date was later than it should have been.
Ø In the three other instances, the signature date of the IRS disaster declaration memorandum was used as the disaster period beginning date instead of the date on which IRS management intended the disaster relief to start. As a result, the disaster period beginning date was later than it should have been.
· In 1 of the 109 taxpayer accounts where disaster relief was not provided as intended, MITS Services programmers did not use the correct disaster period ending date. The ending date input was earlier than the date intended by management. As a result, the computer began the computations before the end of the disaster extension, and interest and penalties were inappropriately assessed on the account.
IRS management did not have procedures to test cases to determine if the disaster programming worked as intended. MITS Services programmers advised that some time after the period covered by our review, they began informally requiring an e-mail from the National Disaster Assistance Program Manager that specifically details the disaster period beginning and ending dates that IRS management wants input for the disaster coding.
· In 15 of the 109 cases where disaster relief was not provided as intended, MITS Services programmers corrected the disaster period dates but did not recalculate interest and penalties or did not generate overpayments where the account was paid in full. These accounts contained $1,513 of inappropriate assessments or excess accruals of interest and/or penalties.
In these cases, the disaster programming did not recalculate interest and penalties after inaccurate disaster period beginning and ending dates were corrected. Initially, incorrect disaster period beginning and/or ending dates were input to the program, and an IRS field employee alerted the National Disaster Assistance Program Manager, who advised MITS Services programmers. Although corrections were made to the disaster coding on the accounts, both during and after the disaster period, MITS Services programmers advised that they did not initiate programming to recalculate the FTF penalty on taxpayer accounts with disaster coding errors until June 2002 and may not have recalculated interest and FTP penalties on the accounts when the dates were changed.
Some assessments and accruals were incorrect for reasons other than the input of incorrect disaster period dates
We determined that interest and penalty assessments were incorrect in other cases for other reasons:
· In 1 of the 109 cases, MITS Services programmers corrected the disaster dates, and the computer automatically abated all the interest and penalties. However, an IRS employee manually reassessed the improper interest and penalties on the account.
· In 3 of the 109 cases, the taxpayers paid the account balance or the account was otherwise cleared prior to the disaster programming being input to the accounts. After the programming was input, an overpayment was not generated on the account for the inappropriately assessed interest and/or penalties.
· In 12 of the 109 cases, MITS Services programmers corrected the disaster period dates prior to the taxpayers filing their returns and fully paying their accounts. While the indicators for the disaster (i.e., the disaster period beginning and ending dates and return due date) are correct on the accounts, interest and/or penalties were inappropriately assessed or accrued on these accounts. Neither we nor IRS management could determine why the programming did not prevent these assessments.
1. To prevent input errors in the future, the Deputy Director, Compliance Policy, SB/SE Division, should formalize the practice of providing MITS Services with the specific disaster period beginning and ending dates for input to the disaster program.
Management’s Response: Since the Disaster Assistance and Emergency Relief Program was transferred to the SB/SE Division in October 2002, all disaster relief memoranda contain the specific beginning and ending dates for filing and payment relief and are distributed to each operating division, including MITS Services. These procedures have been added to the Internal Revenue Manual.
2. The Deputy Director, Compliance Policy, SB/SE Division, should develop procedures to test disaster programming output to ensure that the program is working as management intended.
Management’s Response: SB/SE Division Disaster Assistance Program management advised that procedures to test the programming input were put in place in October 2002. The Disaster Assistance Program staff reviews the accuracy of the file created by MITS Services that contains the county name, zip code, and beginning and ending dates for filing and payment relief. SB/SE Division Disaster Assistance Program management will develop a process to test Master File output programming to ensure taxpayers are receiving the relief intended.
3. For the seven disasters reviewed in this audit, the Director, Compliance, SB/SE Division, should identify taxpayer accounts where the disaster extension was intended but not provided. Appropriate action should be taken to abate or refund interest and penalties assessed on the accounts or to correct interest and penalty accruals on the accounts.
Management’s Response: SB/SE Division Compliance function management has initiated steps to identify affected taxpayers for the seven disasters and plans to take actions to correct the taxpayers’ accounts and issue refunds, if appropriate.
Appendix I
Detailed Objective, Scope,
and Methodology
The
overall objective of this review was to determine the effectiveness of Internal
Revenue Service (IRS) actions to prevent or abate interest and penalty
assessments for individual taxpayers granted filing and payment extensions in
Presidentially declared disaster areas. To accomplish this objective, we performed
the following work:
I.
Identified actions taken by IRS management to prevent or
abate interest and penalty assessments related to extensions granted to
individual taxpayers located in Presidentially declared disaster areas.
A. Interviewed IRS management and other responsible employees to identify the actions taken to prevent or abate interest and penalty assessments for the disaster extensions granted to individual taxpayers during the period January 1 through September 10, 2001. We determined whether the IRS input a systemic abatement of interest and penalties or took action to prevent interest and penalties from being assessed for each disaster with extensions including April 16, 2001.
B. Obtained documentation of disaster extensions granted and actions taken to prevent and abate interest and penalty assessments related to the extensions.
II. Determined whether IRS actions effectively prevented or abated interest and penalty assessments related to extensions granted to individual taxpayers affected by Presidentially declared disaster areas.
A.
Reviewed
individual taxpayer accounts from disasters meeting the criteria for
application of Internal Revenue Code (I.R.C.) Section (§) 6404(h).
1. Identified seven Presidentially declared disasters for which the IRS granted extensions under I.R.C. §§ 6081 and 6161, where the extension period included April 16, 2001, the due date for most Tax Year (TY) 2000 U.S. Individual Income Tax Returns (Form 1040).
2. Reviewed a statistical sample of 461 individual taxpayer accounts from the population of 170,009 accounts with transaction codes (TC) 971 for the selected disasters, where the taxpayer filed a TY 2000 return after April 16, 2001, and interest and/or penalties (Failure to Pay, Failure to File, and Estimated Tax Penalties) had been assessed for TY 2000. We selected a statistical sample of 455 accounts, using a 95 percent confidence level, a +/-2 percent precision, and an expected error rate not to exceed 5 percent. For two of the disasters in our sample, the random number generator did not select a minimum of five accounts. For these 2 disasters, we randomly selected an additional 6 accounts from the population designated for the 2 disasters to meet the minimum sample size; thus, our total sample size was 461 accounts. Statistical sampling was used because we wanted to estimate the number of taxpayer accounts in the population for which the interest and/or penalties were inappropriately assessed. We discussed our sampling methodology with an expert statistician, who provided the formulas used to project our sample results over the population.
B.
Determined
the cause of any inappropriate assessments of interest and penalties.
1.
Determined if a programming or other error occurred.
2.
Estimated the number of taxpayers affected by any
programming errors or discrepancies and the amount of interest and penalty
assessments made in error by statistically projecting the error rate identified
from the sample across the universe of 170,009 taxpayer accounts with TC 971s
for the selected disasters, where the taxpayer filed a TY 2000 return after
April 16, 2001, and interest and/or penalties (Failure to Pay, Failure to File,
and Estimated Tax Penalties) were assessed for TY 2000.
Appendix II
Major Contributors to This Report
Daniel R. Devlin, Assistant Inspector General for Audit
(Headquarters Operations and Exempt Organizations Programs)
Nancy
A. Nakamura, Director
Gerald
T. Hawkins, Audit Manager
Thomas
F. Seidell, Acting Audit Manager
Theresa
M. Berube, Senior Auditor
Catherine
E. Cloudt, Senior Auditor
Julia
M. Collins, Senior Auditor
Deadra
M. English, Senior Auditor
Barry
G. Huff, Senior Auditor
Yolanda
D. Brown, Auditor
Andrew J. Burns, Auditor
Appendix III
Commissioner C
Deputy Commissioner
for Services and Enforcement SE
Director, Compliance, Small Business/Self-Employed Division SE:S:C
Deputy Director, Compliance Policy, Small Business/Self-Employed Division SE:S:C:CP
Director, External Stakeholders, Small Business/Self-Employed Division SE:S:C:CP:E
Director, Reporting Compliance, Small Business/Self-Employed Division SE:S:C:CP:RC
Director, Strategy and Finance, Wage and Investment Division SE:W:S
Chief, Information Technology Services OS:CIO:I
Chief Counsel CC
National Taxpayer Advocate
TA
Director, Office of Legislative Affairs CL:LA
Director, Office of
Program Evaluation and Risk Analysis
RAS:O
Office of Management Controls OS:CFO:AR:M
Audit Liaisons:
Commissioner, Small
Business/Self-Employed Division SE:S
Commissioner, Wage and Investment Division SE:W
Appendix IV
This appendix presents detailed information on the measurable impact that our recommended corrective actions will have on tax administration. This benefit will be incorporated into our Semiannual Report to the Congress.
Type and Value of Outcome Measure:
· Taxpayer Entitlements – Actual; we estimate that $5.1 million in interest was incorrectly assessed or accrued on 39,460 taxpayer accounts and should be abated. In addition, we estimate that $3.3 million in Failure to File (FTF) penalties were inappropriately assessed on 11,063 taxpayer accounts, and $2.3 million in Failure to Pay (FTP) penalties were inappropriately assessed or accrued on 28,765 taxpayer accounts (see page 3).
Methodology Used to Measure the Reported Benefit:
A computer download of limited account information was obtained from the Internal Revenue Service (IRS) Individual Master File (IMF) for accounts where: 1) a Transaction Code (TC) 971 with an Action Code of 086 or 087 and a Federal Emergency Management Agency (FEMA) Code posted to the taxpayer’s entity section from January 1 through September 10, 2001, and 2) the taxpayer had a U.S. Individual Income Tax Return (Form 1040) posted to his or her Tax Year (TY) 2000 account. Through queries of these IMF data, we identified 170,009 individual taxpayer accounts with the disaster coding for the 7 disasters meeting the criteria for application of Internal Revenue Code (I.R.C.) Section (§) 6404(h), where transaction codes for interest and the FTF, FTP, or Estimated Tax penalties were posted to the account. We selected a valid statistical sample of 461 accounts, using an attribute sampling methodology and a 95 percent confidence level, a +/- 2 percent precision, and an expected error rate not to exceed 5 percent.
We reviewed the interest and penalty assessments on these 461 accounts to determine if the disaster extension period was excluded in any interest or penalty assessments. We used the Decision Modeling, Incorporated software to recalculate the assessments and compute any inappropriate assessments and excess accruals on the accounts for the disaster extension periods. We determined that:
· For 107 of the 461 accounts, there was $13,766 in inappropriate interest assessments or excess accruals.
· For 84 of the 461 taxpayer accounts, there were inappropriate FTF and/or FTP penalty assessments and accruals. Thirty taxpayers were inappropriately assessed FTF penalties totaling $6,158, and 78 taxpayers were inappropriately assessed or had excess accruals of FTP penalties totaling $8,965. ($6,158 + $8,965 = $15,123)
We are 95 percent confident that in this population:
· Interest was inappropriately assessed and/or accrued on 39,460 taxpayer accounts (between 32,900 and 46,200), and the inappropriate interest assessments and accruals totaled approximately $5,134,272 (between $2,476,162 and $7,792,382).
· FTF penalties were inappropriately assessed on 11,063 taxpayer accounts (between 7,231 and 14,896), and the inappropriate assessments totaled approximately $3,306,675 (between $1,490,315 and $5,123,035).
· FTP penalties were inappropriately assessed and accrued on 28,765 taxpayer accounts (between 22,939 and 34,591), and the inappropriate assessments totaled approximately $2,271,320 (between $884,926 and $3,657,714).
Appendix V
Presidentially Declared Disasters Included in This
Review
Mississippi
- Federal Emergency Management Agency Contract #1360:
On February 23, 2001, the President declared several Mississippi counties as Federal disaster areas due to damage as the result of tornadoes. The Internal Revenue Service (IRS) issued a declaration memorandum and granted disaster victims in the designated areas an automatic extension to file returns and pay tax, as authorized by Internal Revenue Code (I.R.C.) Sections (§§) 6081 and 6161. The extension was granted to June 15, 2001, for affected taxpayers whose Federal tax returns were due on or after February 16, 2001, and before June 15, 2001.
Washington - Federal Emergency Management Agency Contract #1361:
On March 1, 2001, the President declared several Washington counties as Federal disaster areas due to damage as the result of an earthquake occurring on February 28, 2001. The IRS issued a declaration memorandum on March 13, 2001, and granted disaster victims in the designated areas an automatic extension to file returns and pay tax, as authorized by I.R.C. §§ 6081 and 6161. The extension was granted to April 30, 2001, for affected taxpayers whose Federal tax returns were due on or after February 28, 2001, and before April 30, 2001. The same provisions also applied to counties later declared Presidential disaster areas in amended declarations for this disaster.
Iowa
- Federal Emergency Management Agency Contract #1367:
On May 2, 2001, the President declared several Iowa counties as Federal disaster areas as the result of damage from severe storms, tornadoes, and flooding that started April 8, 2001. The IRS issued a declaration memorandum on May 9, 2001, and granted disaster victims in the designated areas an automatic extension to file returns and pay tax, as authorized by I.R.C. §§ 6081 and 6161. The extension was granted to August 15, 2001, for affected taxpayers whose Federal tax returns were due on or after April 8, 2001, and before August 15, 2001. The same provisions also applied to counties later declared Presidential disaster areas in amended declarations for this disaster.
Wisconsin
- Federal Emergency Management Agency Contract #1369:
On May 11, 2001, the President declared several Wisconsin counties as Federal disaster areas as the result of damages caused by severe storms and flooding that started April 10, 2001. The IRS issued a declaration memorandum on May 23, 2001, and granted disaster victims in the designated areas an automatic extension to file returns and pay tax, as authorized by I.R.C. §§ 6081 and 6161. The extension was granted to August 15, 2001, for affected taxpayers whose Federal tax returns were due on or after April 10, 2001, and before August 15, 2001. The same provisions also applied to counties later declared Presidential disaster areas in amended declarations for this disaster.
Minnesota
- Federal Emergency Management Agency Contract #1370:
On
May 16, 2001, the President declared several Minnesota counties as Federal
disaster areas as the result of damages caused by severe storms and flooding
that started March 23, 2001. The IRS
issued a declaration memorandum on May 23, 2001, and granted disaster victims
in the designated areas an automatic extension to file returns and pay tax, as
authorized by I.R.C. §§ 6081 and 6161.
The extension was granted to August 15, 2001, for affected taxpayers
whose Federal tax returns were due on or after March 23, 2001, and before
August 15, 2001. The same provisions
also applied to counties later declared Presidential disaster areas in amended
declarations for this disaster.
Nebraska
- Federal Emergency Management Agency Contract #1373:
On May 16, 2001, the President declared several Nebraska counties as Federal disaster areas as a result of damage caused by severe storms, tornadoes, and flooding that started April 10, 2001, and continued until April 23, 2001. The IRS issued a declaration memorandum on May 23, 2001, and granted disaster victims in the designated areas an automatic extension to file returns and pay tax, as authorized by I.R.C. §§ 6081 and 6161. The extension was granted to August 15, 2001, for affected taxpayers whose Federal tax returns were due on or after April 10, 2001, and before August 15, 2001. The same provisions applied to counties later declared Presidential disaster areas in amended declarations for this disaster.
South
Dakota - Federal Emergency Management Agency Contract #1375:
On May 17, 2001, the President declared several South Dakota counties as Federal disaster areas as a result of damage caused by severe storms, ice jams, and flooding that started March 1, 2001, and continued until April 30, 2001. The IRS issued a declaration memorandum on May 23, 2001, and granted disaster victims in the designated areas an automatic extension to file returns and pay tax, as authorized by I.R.C. §§ 6081 and 6161. The extension was granted to August 15, 2001, for affected taxpayers whose Federal tax returns were due on or after March 1, 2001, and before August 15, 2001. The same provisions applied to counties later declared Presidential disaster areas in amended declarations for this disaster.
Appendix VI
Management’s Response to
the Draft Report
The response
was removed due to its size. To see the
response, please go to the Adobe PDF version of the report on the TIGTA Public
Web Page.