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Part 25. Special Topics

Chapter 6. Statute Of Limitations

Section 16. Combat Zone For Statute Processing

25.6.16  Combat Zone For Statute Processing

25.6.16.1  (11-01-2004)
Combat Zone Overview

  1. This section provides guidance for identifying and resolving cases for taxpayers who are or have served in the following:

    1. In an area designated as a combat zone,

    2. In a contingency operation designated by the Department of Defense,

    3. In a qualified hazardous duty area as defined by Congress, or

    4. In direct support of military operations in a combat zone certified by the Department of Defense.

  2. The descriptions of a combat zone or other military service areas are as follow:

    1. A Combat Zone is an area designated in an Executive Order by the President of the United States. IRC § 7508 cross-references IRC § 112 (exclusion from gross income for combat pay) for this definition.

    2. Contingency Operation. The rules in IRC § 7508 have been extended for a contingency operation designated by the Department of Defense for an individual deployed outside the United States away from the individual's permanent duty station while participating in an operation. This new rule is effective for any period for performing an act which has not expired before 11/11/2003.

    3. Qualified Hazardous Duty Area. Congress has extended some of the same tax relief provided for those in a combat zone to those in a qualified hazardous duty area. Congress has also extended the relief to persons performing qualifying service outside such area. See Notice 99–30, Tax Relief for Those Affected by Operation Allied Force, 1999–1 C.B. 1135, for an example of qualified hazardous duty area.

    4. Area Certified by the Department of Defense. The Department of Defense may certify an area as being in direct support of military operations in a combat zone and a person serving in such an area who receives hostile fire/ imminent danger pay under 37 U.S.C. § 310 (a) (13) is treated as serving in a combat zone pursuant to Treas. Reg. § 1.112–1(e).

25.6.16.2  (05-26-2004)
Combat Zone Research

  1. To handle Combat Zone cases you may need to refer to the following:

    • IRM 25.6, Statute Of Limitations

    • IRC Section 7508

    • Publication 3

25.6.16.3  (10-01-2007)
Deadlines Postponed

  1. IRC § 7508 postpones the deadlines for certain acts performed by taxpayers and the Service. The acts covered by IRC § 7508 include filing any return for income estate, or gift tax; paying any income, estate or gift tax; filing a claim for credit or refund of any tax; assessing or collecting a tax; claiming a refund or litigating a suit. Also, Rev. Proc. 2005–27, 2005–1 C.B 1050, or its successor expands the list provided in the statute.

    Note:

    Penalties and interest. If the actual filing is before the postponed due date and it is a balance due return, compute penalty and underpayment of interest from the postponed due date or actual filing date.

  2. The deadline for acts that are postponed for taxpayers serving in a particular operation are described in a notice issued by the Service for that operation (e.g., Notice 2003–21, 2003–1 C.B. 817 provides that all of the acts listed in Rev. Proc. 2002–71 are applicable for those taxpayers who served in Operation Iraqi Freedom).

    Note:

    Employment and excise taxes. The IRC, itself, does not postpone the deadline for certain acts. In order for the deadline for any act to be postponed, the Service must issue a notice listing the specific acts that are postponed. In addition, any notice must list the specific types of taxes to which the notice applies. For example, if the Service issues a notices that postpones the time taxpayers have to file income tax returns and pay income taxes, the deadlines for filing employment and excise tax returns and the deadlines for paying those taxes have not been postponed. A notice may, however, postpone the deadline for filing a claim for refund of any tax, which would includes all types of taxes. See IRC § 7508(a)(1)(E).

25.6.16.4  (11-01-2004)
Individuals Covered

  1. The postponement primarily applies to individuals who served in the Armed Forces in a combat zone or qualified hazardous duty area (and to persons performing qualifying services outside such area) or who participated in a contingency operation.

    Note:

    "C" Freezes. Martinsburg Computing Center (MCC) extracts for MRS/TRS Transcripts and Taxpayer Information File (TIF) tax modules to identify accounts where military and civilian personnel are/were stationed in a Combat Zone. The freeze code "-C" ("-D" for Individual Retirement Account File (IRAF)) is also displayed.

  2. The postponement also applies to those serving in support of the Armed Forces in a combat zone. For example, those serving in support include merchant marines serving aboard vessels under the operational control of the Department of Defense, Red Cross personnel, accredited correspondents and civilian personnel acting under the direction of the U.S. Armed Forces in support of those forces.

  3. Hospitalization. The postponement applies after the last day of any"continuous qualified hospitalization" for an injury from service in the combat zone or qualified hazardous duty area ( and to person performing qualifying service outside such area) or contingency operation. The period of postponement cannot be more than 5 years for hospitalization in the United States.

  4. Application to Spouse and Children. The relief also applies to the spouse and dependent children of the individual; however, the period of postponement for hospitalization in the United States does not apply to a spouse or children.

25.6.16.5  (10-01-2007)
Computation

  1. You must add the 180 day period to any combat zone computation. A deadline may be postponed 180 days after the last day of service in the combat zone (or hazardous duty area) or participating in a contingency operation or hospitalization from such service or participation.

  2. Additional time for service or hospitalization during a filing period. In addition to the 180 days mentioned in IRC 7508 itself, a deadline that includes a filing period is postponed by the number of days that were left in any period for taking action when the taxpayer entered the combat zone or the contingency operation.

    Example:

    If the taxpayer entered the combat zone or was hospitalized in December preceding the filing season, and remained there into January, the entire 105 day period from January 1 to April 15 for filing an individual income tax return (106 days in a leap year) will be added to the last day of service in the combat zone (along with the 180 day period) to determine the extended deadline for filing the tax return.

25.6.16.6  (11-01-2004)
Re-Entry into the Combat Zone

  1. Individuals re-enter the combat zone for a second time. These are called "in & out" . Treat these as beginning on the earliest entry date and the latest departure date because they were in and out within short time frames. The system does recognize when a new period has started and ended. You must calculate separately, the interim period, between the combat zone periods for purposes of the statutory periods for assessment, collection, and refunds, and for penalty and interest computation.

  2. In order to determine whether it is necessary to establish separate combat zone periods, you must first decide the action required on the account. If it is the requirement to file a return, a new period must be determined when there are more than 285 days (286 in a leap year) between the prior exit date and the subsequent entry date. For other actions not related to filing, separate periods must be calculated when there has been more than 180 days between the prior exit date and the subsequent entry date. All TC 500’s (entry and departure) post to Tax Year 90 module but they are retained in the ENTITY.

25.6.16.7  (11-01-2004)
Combat Zone Procedures

  1. STAT, AM, AM–X transcripts, amended returns, correspondence etc., may have adjustment action if applicable. IRS will not initiate assessments/offsets with the exception of child support during the period a taxpayer is in a combat zone, and for 180 calendar days thereafter. If action is taken on a taxpayer's account and it results in a balance due status, only the first notice will be issued; all further notices will be suppressed and collection activity suspended.

  2. In cases where a Combat Departure Date (CDD) has not been entered on an account, and the taxpayer has filed a refund return, issue a manual refund, if an account is frozen from refunding.

25.6.16.8  (04-01-2007)
Current Combat Zones and Qualified Hazardous Duty Areas

  1. Recent combat zone and qualified hazardous duty areas are:

    1. Executive order number (13239) designated Afghanistan and the airspace above as a combat zone. (Operation Enduring Freedom) September 19, 2001 is the date of commencement of combatant activities. Members of the U.S. Armed Forces serving in Afghanistan or those serving in direct support are entitled to the suspension of time provisions provided by section 7508. Members of the U.S. Armed Forces in Pakistan, Tajikistan, and Jordan qualify as being in direct support as of September 21, 2001. Members of the U.S. Armed Forces in Kyrgyzstan and Uzbekistan qualify as being in direct support as of October 1, 2001. Members of the U.S. Armed Forces in the Republic of the Philippines qualify as being in direct support as of January 9, 2002. Members of the U.S. Armed Forces in Yemen qualify as being in direct support as of April 10, 2002. Members of the U.S. Armed Forces in Djibouti qualify as being in direct support as of July 1, 2002.

    2. Executive Order number (13119) designated the Federal Republic of Yugoslavia (Serbia/Montenegro), Albania, Adriatic Sea, and the Ionian Sea north of the 39th parallel including the airspace above these areas. (Operation Allied Force).

    3. Public law 104–117 established Bosnia, Herzegovina, Croatia, and Macedonia as qualified hazardous duty areas, effective November 1995.

    4. Executive order number (12744) designated the Arabian Peninsula areas: Persian Gulf, the Red Sea, the Gulf of Oman, the part of the Arabian Sea that is north of 10 degrees north latitude and west of 68 degrees east longitude, the Gulf of Eden and the total land areas of Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar, and the United Arab Emirates and the airspace above all such locations. (Operation Desert Storm) Military personnel serving in support of such allied forces are eligible for all combat zone related tax benefits.

    5. Direct Support of Executive Order (12744) designated Turkey, effective January 1, 2002, Israel, effective January 1, 2003, the Mediterranean Sea east of 30 degree East longitude, effective April 1, 2003, and Syria, effective January 1, 2004.

      Note:

      See Publication 3 for additional information and qualified hazardous duty areas that may qualify for similar relief.


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