Reservists, New Enlistees May Gain Deferral For Back Taxes

The IRS reminds reservists called to active duty and new enlistees in the armed forces that they might qualify for a deferral of taxes owed if they can show that their ability to pay taxes is impaired because of their military service. The Soldiers and Sailors Civil Relief Act provides this benefit.

The Act covers active duty members of the military services — Army, Navy, Air Force, Marine Corps and Coast Guard. Reservists must be placed on active duty to qualify. National Guard personnel not serving in a “federalized” status — that is, called to active duty specifically by the President of the United States — are not covered.

The deferral applies to taxes that fall due before or during military service, and extends the payment deadline to six months after the military service ends. No interest
or penalty accrues during the deferral period.

The deferral is not automatic. A taxpayer must apply for the deferral. When applying, the taxpayer must prove both an inability to pay the tax and that this inability resulted from military service. A taxpayer must also have received a notice of tax due, or be on an installment agreement with the IRS, before applying for the deferral.

The deferral is limited to an initial period of service, not reenlistment periods. This would include:

  • An active duty period pursuant to a first enlistment
  • A period of service following recall to active duty from a Reserve or National Guard unit, or
  • The first period of reenlistment following a break in service of at least one year.

For officers meeting one of these conditions, the period is limited to two years.

The deferral does not extend the deadline for filing any tax returns. However, taxpayers may get extra time to file under other provisions, such as being stationed overseas or in a combat zone. Afghanistan was designated a combat zone beginning September 19, 2001, by Executive Order No. 13239.

Check with your tax preparer for details for applying for the tax payment deferral.


This daily Tax Tip has been provided by the Internal Revenue Service.

You may like these other stories...

The Republican-led House of Representatives is expected to pass a bill this week that would permanently extend the bonus depreciation tax break. But don’t expect President Obama to sign it.The Obama administration said...
Washington D.C., our nation's capital, is the healthiest city in the country, according to a new report from USA Today. But now it's going to cost politicos on the Hill and Gen-Xers in Foggy Bottom a little extra to...
Credit Suisse says pension assets at risk unless court delays sentencingJohn Letzing of the Wall Street Journal reported on Wednesday that Credit Suisse Group AG says its management of billions of dollars in assets for...

Upcoming CPE Webinars

Jul 16
Hand off work to others with finesse and success. Kristen Rampe, CPA will share how to ensure delegated work is properly handled from start to finish in this content-rich one hour webinar.
Jul 17
This webcast will cover the preparation of the statement of cash flows and focus on accounting and disclosure policies for other important issues described below.
Jul 23
We can’t deny a great divide exists between the expectations and workplace needs of Baby Boomers and Millennials. To create thriving organizational performance, we need to shift the way in which we groom future leaders.
Jul 24
In this presentation Excel expert David Ringstrom, CPA revisits the Excel feature you should be using, but probably aren't. The Table feature offers the ability to both boost the integrity of your spreadsheets, but reduce maintenance as well.