Certain periods of time are disregarded when determining whether certain tax matters have been taken care of on time. For ease of understanding, this publication refers to these provisions as "extensions of deadlines." These deadline extensions should not be confused with other parts of the tax law that refer to extensions of time for performing acts.

Extension. The deadline for filing tax returns, paying taxes, filing claims for refund, and taking other actions with the IRS is automatically extended if you serve in the Armed Forces in a combat zone/qualified hazardous duty area, or have qualifying service outside of a combat zone/qualified hazardous duty area. See Qualifying service outside combat zone, earlier. Additionally, if you are deployed overseas away from your permanent duty station in support of operations in a qualified hazardous duty area, but outside the qualified hazardous duty area, you also receive these extensions (but not other combat zone benefits). The deadline for IRS to take certain actions, such as collection and examination actions, is also extended. See Combat Zone, earlier, for the beginning dates for the Kosovo area combat zone, the Persian Gulf area combat zone, and the qualified hazardous duty areas.

Your deadline for taking actions with the IRS is extended for 180 days after the later of:

1. The last day you are in a combat zone/qualified hazardous duty area or have qualifying service outside of the combat zone/qualified hazardous duty area (or the last day the area qualifies as a combat zone or qualified hazardous duty area), or
2. The last day of any continuous qualified hospitalization (defined later) for injury from service in the combat zone/qualified hazardous duty area or while performing qualifying service outside of the combat zone/qualified hazardous duty area.

In addition to the 180 days, your deadline is also extended by the number of days that were left for you to take the action with the IRS when you entered a combat zone/qualified hazardous duty area (or began performing qualifying service outside the combat zone/qualified hazardous duty area). If you entered the combat zone/qualified hazardous duty area (or began performing qualifying service outside the combat zone/qualified hazardous duty area) before the period of time to take the action began, your deadline is extended by the entire period of time you have to take the action. For example, you had 3 1/2 months (January 1 - April 15, 2000) to file your 1999 tax return. Any days of this 3 1/2 month period that were left when you entered the combat zone (or the entire 3 1/2 months if you entered the combat zone by January 1) are added to the 180 days when determining the last day allowed for filing your 1999 tax return.

Example 1. Captain Margaret Jones entered Saudi Arabia on December 1, 1998. She remained there through March 31, 2000, when she departed for the United States. She was not injured and did not return to the combat zone. The deadlines for filing Captain Jones' 1998, 1999, and 2000 returns are figured as follows.

• The 1998 tax return deadline is January 10, 2001. This deadline is 285 days (180 plus 105) after Captain Jones' last day in the combat zone (March 31, 2000). The 105 additional days are the number of days in the 3 1/2 month filing period that were left when she entered the combat zone (January 1 - April 15, 1999).
• The 1999 tax return deadline is January 11, 2001. The deadline is 286 days (180 plus 106) after Capt. Jones' last day in the combat zone (March 31, 2000).
• The 2000 tax return deadline is not extended because the 180-day extension period after March 31, 2000, ends on September 27, 2000, which is before the start of the filing period for her 2000 return (January 1 - April 16, 2001).

Example 2. Petty Officer Leonard Brown's ship entered the Persian Gulf on January 5, 1999. On February 15, 1999, Leonard was injured and was flown to a U.S. hospital. He remained in the hospital through April 21, 2000. The deadlines for filing Petty Officer Brown's 1998, 1999, and 2000 returns are figured as follows.

• The 1998 tax return deadline is January 29, 2001. Petty Officer Brown has 281 days (180 plus 101) after his last day in the hospital (April 21, 2000) to file his 1998 return. The 101 additional days are the number of days in the 3 1/2 month filing period that were left when he entered the combat zone (January 5 - April 15, 1999). January 27, 2001, falls on a Saturday so the return must be filed by January 29, 2001.
• The 1999 tax return deadline is February 1, 2001. Petty Officer Brown has 286 days (180 plus 106) after April 21, 2000, to file his 1999 tax return. The 106 additional days are the number of days in the 2000 filing period that were left when he entered the combat zone.
• The 2000 tax return deadline is not extended because the 180-day extension period after April 21, 2000, ends on October 18, 2000, which is before the start of the filing period for his 2000 return (January 1 - April 16, 2001).

Example 3. You generally have 3 years from April 15, 1997, to file a claim for refund against your timely filed 1996 tax return. This means that your claim normally must be filed by April 15, 2000. However, if you served in a combat zone from November 1, 1999, through March 23, 2000, and were not injured, your deadline for filing that claim is extended 347 days (180 plus 167) after you leave the combat zone. This extends your deadline to March 5, 2001. The 167 additional days are the number of days in the 3-year period for filing the refund claim that were left when you entered the combat zone on November 1 (November 1, 1999 - April 15, 2000).

Missing status. Time in a missing status (missing in action or prisoner of war) counts as time in a combat zone or a qualified hazardous duty area.

Support personnel. The deadline extension provision also applies if you are serving in a combat zone or a qualified hazardous duty area in support of the Armed Forces. This includes Red Cross personnel, accredited correspondents, and civilian personnel acting under the direction of the Armed Forces in support of those forces.

Qualified hospitalization. The hospitalization must be the result of an injury received while serving in a combat zone or a qualified hazardous duty area. Qualified hospitalization means:

1. Any hospitalization outside the United States, and
2. Up to 5 years of hospitalization in the United States.

Actions extended. The actions to which the deadline extension provision applies include:

• Filing any return of income, estate, or gift tax (except employment and withholding taxes),
• Paying any income, estate, or gift tax (except employment and withholding taxes),
• Filing a petition with the Tax Court for redetermination of a deficiency, or for review of a Tax Court decision,
• Filing a claim for credit or refund of any tax,
• Bringing suit for any claim for credit or refund,
• Purchasing a replacement home to postpone paying tax on the gain on the sale (before May 7, 1997) of your old home,
• Making a qualified retirement contribution to an IRA,
• Allowing a credit or refund of any tax by the IRS,
• Assessment of any tax by the IRS,
• Giving or making any notice or demand by the IRS for the payment of any tax, or for any liability for any tax,
• Collection by the IRS of any tax due, and
• Bringing suit by the United States for any tax due.

If the IRS takes any actions covered by these provisions or sends you a notice of examination before learning that you are entitled to an extension of the deadline, contact your legal assistance office. No penalties or interest will be imposed for failure to file a return or pay taxes during the extension period.

Even though the deadline is extended, you may want to file a return earlier to receive any refund due. See Filing Returns, earlier.

Spouses. Spouses of individuals who served in a combat zone are entitled to the same deadline extension with two exceptions.

1. The extension does not apply to a spouse for any tax year beginning more than 2 years after the date the area ceases to be a combat zone.
2. The extension does not apply to a spouse for any period the qualifying individual is hospitalized in the United States for injuries incurred in a combat zone.

Not in a combat zone. If you are a reservist called to active duty or a regular military member but are not in a combat zone, you may still qualify to defer the payment of back taxes. To qualify, you must be serving your initial period of service, and you must show that your ability to pay the back taxes has been materially impaired.

Initial period of service. The initial period of service is defined as the period of active duty following recall to active duty from an inactive reserve or National Guard unit. For regular military personnel, it is the period following induction or first enlistment in the Armed Forces or the first period of reenlistment for a person who has been out of the service for a year or more. For an officer, the initial period of service is limited to two years of active service after one of the above occurrences.

Material impairment. To indicate material impairment, you must show that your income dropped as a result of going into military service.

Request for deferment. If you have a current payment agreement, you must make a written request for deferment to the IRS office where you have the agreement.

If you have received a notice requesting payment, you must make a written request for deferment to the IRS office that issued the notice.

If you do not have a current payment agreement, you must wait until you receive a notice asking for payment before you request a deferral.

Your request must include your name, social security number, monthly income and source of income before military service, current monthly income, military rank, date you entered military service, and date you are eligible for discharge. If possible, enclosing a copy of your orders would be helpful.

The IRS will review your request and advise you in writing of its decision. Should you need further assistance, you can call the IRS at 1-800-829-1040 to discuss your situation.

If your request for deferment is granted by the IRS, you will be able to defer payment of back taxes until 6 months after the end of your initial period of service.

Maximum rate of interest. Section 526 of the Soldiers' and Sailors' Relief Act limits the maximum interest rate you can be charged to 6% per year for obligations or liabilities incurred before your entry into active service. The reduced rate applies only if your service materially affects your ability to pay. This rate applies only to that interest charged during the period of your active duty.

To substantiate your claim for this reduced interest rate, you must furnish the IRS a copy of your orders or reporting instructions that detail the call to active duty.

Filing Returns for Combat Zone/ Qualified Hazardous Duty Area Participants

You can choose to file your return before the end of your extension period. File your return in accordance with instructions provided by the Armed Forces.

If you are acting on behalf of someone serving in a combat zone/qualified hazardous duty area and you do not have a power of attorney from that person specifying that you can handle federal tax matters, the IRS will accept a general power of attorney or other statement signed by that person that authorizes you to act on his or her behalf. A copy must be attached to the tax return.

If it is not possible for the spouse of someone serving in a combat zone/qualified hazardous duty area to obtain that person's signature on a joint return, power of attorney form, or other signed authorization to act on his or her behalf, the IRS will accept a written statement explaining that the husband or wife is serving in a combat zone/qualified hazardous duty area. The statement must be signed by the spouse filing the tax return and attached to the return.

Outside the combat zone/qualified hazardous duty area. If you do not qualify for the deadline extension provision, your 2000 return is due by the regular due date, April 16, 2001 (June 15, 2001, if you are stationed outside the United States and Puerto Rico on April 15). Interest on any unpaid tax will be charged from April 15.

There are other provisions that extend the time for filing your return. See Extensions, earlier.

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