What H.R. 1491 means for taxpayers and pros

Congress has taken a significant step to address a longstanding technical issue in disaster tax relief. H.R. 1491, the Disaster Related Extension of Deadlines Act, became law on Dec. 26, 2025, and will have a meaningful impact on taxpayers affected by federally declared disasters, as well as the professionals who advise them. 

At its core, this legislation ensures that IRS disaster relief postponements are fully aligned with the rules governing tax refund claims. It closes a gap that has, in the past, caused taxpayers to lose out on refunds even when they relied on IRS-granted extensions. 

Understanding the problem

Under tax law, taxpayers generally have three years from the time they file a return to claim a refund. However, the amount of any refund is limited by a “lookback” rule: the IRS can only refund taxes paid within the three years before the claim, plus any extension of time to file the return.

When a federally declared disaster strikes, the IRS often postpones filing and payment deadlines under §7508A of the Internal Revenue Code. These postponements are intended to give taxpayers time to recover and gather records. However, prior law has not treated these disaster postponements as true “extensions” for refund purposes. As a result, even if a taxpayer filed within the postponed period, they could lose part or all of a refund because the lookback period did not account for the disaster relief.

In fact, the clock for refund eligibility kept running, even when the IRS told taxpayers they could wait.

What H.R. 1491 changes

H.R. 1491 corrects this mismatch. This newly-enacted law requires the IRS to treat disaster-related postponements as extensions of time for purposes of the refund lookback period. This means that when the IRS postpones a filing deadline due to a federally declared disaster, the postponed period will be treated just like a traditional extension for refund purposes. Taxes paid before the return was filed will not be excluded from refund eligibility simply because disaster relief was granted. 

For taxpayers, this change ensures they are not penalized for relying on IRS relief. For tax professionals, it brings much-needed consistency and eliminates a technical trap that has led to refunds being denied in disaster cases.

Updated IRS notice and demand rules

The law also addresses the timing of IRS collection notices. Under past law, the IRS was required to issue a notice and demand for payment within 60 days of making an assessment, but not before the tax due date. Disaster postponements, however, were not always treated as part of the due date, leading to premature collection notices and confusion.

H.R. 1491 clarifies that the “last day prescribed for payment” includes any disaster-related postponement. This ensures that the IRS cannot issue collection notices before the actual, postponed due date, and taxpayers will not be threatened with penalties or interest before their relief period ends. 
Practical impact

For tax professionals, H.R. 1491 removes a technical pitfall that has complicated disaster-related refund claims. Practitioners can now rely on IRS disaster postponements without worrying that their clients’ refund claims will be denied due to the lookback rule.

For taxpayers, especially individuals and small businesses recovering from disasters, the new law reinforces fairness. Disaster relief is intended to help people get back on their feet, not to quietly erode their rights to a refund.

What’s next?

Now signed into law, these changes will apply to all disaster-related postponements authorized by the IRS. Tax professionals should watch for further IRS and Treasury guidance on implementation, including how the new rules will apply to pending or future refund claims.

Importantly, H.R. 1491 does not expand the scope of disaster relief. Instead, it ensures that the relief already granted works as intended, protecting taxpayers’ rights and simplifying compliance in the wake of disasters.

In the complex world of tax administration, this fix is a welcome and practical improvement for those affected by disaster.