Internal Revenue Bulletin:  2007-37 

September 10, 2007 

Notice 2007-74

Hurricane Katrina Disaster Relief and Bankruptcy


PURPOSE

This notice clarifies Notice 2006-56, 2006-28 I.R.B. 58, which, under the authority of section 7508A of the Internal Revenue Code, postponed until October 16, 2006 the time for certain individuals affected by Hurricane Katrina to file 2005 income tax returns (among other things). Notice 2006-56 also provided that the filing period would be postponed until April 15, 2007 for taxpayers who, under I.R.C. section 6081, requested an extension of time to file their 2005 returns prior to October 16, 2006.

Revenue Ruling 2007-59 held that the Internal Revenue Service’s grant of relief under section 7508A does not change the date on which a return is “last due, including extensions” for purposes of Bankruptcy Code sections 507(a)(8)(A)(i) and 523(a)(1)(A), which provide priority and nondischargeability for certain tax claims in bankruptcy cases. Questions have arisen as to the date on which the 2005 return would be “last due, including extensions” if an affected taxpayer receives relief under section 7508A, obtains an extension of time to file under section 6081 within the 7508A postponement period, and files bankruptcy.

Bankruptcy Effect of Section 7508A Relief and Section 6081 Extension

Unlike the postponement of time under section 7508A, the grant of a request for extension under section 6081 changes the date on which a return is “last due, including extensions” for purposes of Bankruptcy Code sections 507(a)(8)(A)(i) and 523(a)(1)(A). See In re McDermott, 286 B.R. 913 (M.D. Fla. 2002). If an affected taxpayer under Notice 2006-56 requested an extension of time to file 2005 income taxes within the section 7508A postponement period, the return would be considered in a later bankruptcy case to be “last due, including extensions” on October 15, 2006, six months after the original due date. October 15, 2006 will therefore be the determinative date for priority and dischargeability purposes of 2005 taxes under Bankruptcy Code sections 507(a)(8)(A)(i) and 523(a)(1)(A).

EFFECT ON OTHER DOCUMENTS

This document amplifies Revenue Ruling 2007-59 and clarifies Notice 2006-56.

DRAFTING INFORMATION

The principal author of this notice is Micah A. Levy of the Office of Associate Chief Counsel (Procedure & Administration). For further information regarding this notice, contact Micah A. Levy at (202) 622-3620 (not a toll-free call).


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