August 2, 2022
Updated August 24, 2022

In late July 2022, areas of Kentucky and Missouri were hit with severe summer storms.  Because of the damage, flooding,  and disruption caused by the storms, the IRS has issued tax relief to those who reside, or who have businesses located in specified FEMA disaster areas.  Currently, the IRS has published Relief Notices KY-2022-06  (Kentucky) and MO-2022-07 (Missouri) for counties designated by FEMA (“Notices”).

The Notices provide universal tax relief that extends the deadlines to file various individual and business tax returns and make tax payments for affected taxpayers until November 15th.  The Notices also cover other time sensitive actions, including those in Rev. Proc. 2018-58, which covers the deadlines applicable to Section 1031 like-kind exchanges.  It remains to be seen if other areas will be provided disaster relief.  If additional relief is provided, or areas added, we will update this article accordingly.  The current list of eligible localities is always available on the disaster relief page on

Tax Relief for areas of Kentucky:

Individuals and households affected by severe storms, flooding, landslides and mudslides that reside or have a business in Breathitt, Clay, Cumberland, Floyd, Johnson, Knott, Lee, Leslie, Letcher, Lincoln, Magoffin, Martin, Owsley, Perry, Pike, Powell, Whitely, and Wolfe counties qualify for tax relief. The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after July 26, 2022, and before November 15, 2022, are postponed through November 15, 2022.”

Tax Relief for areas of Missouri:

“Individuals and households affected by severe storms and flooding that reside or have a business in the Independent City of St. Louis, Montgomery, St. Charles and St. Louis counties qualify for tax relief. The declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after July 25, 2022, and before November 15, 2022, are postponed through November 15, 2022.”

Both Notices also provide relief to those taxpayers who already had filed for an extension of the original deadline to file their tax returns.

“This means individuals who had a valid extension to file their 2021 return due to run out on October 17, 2022, will now have until November 15, 2022, to file. The IRS noted, however, that because tax payments related to these 2021 returns were due on April 18, 2022, those payments are not eligible for this relief.”

*Please note that for tax partnerships that are calendar year taxpayers and have returns due March 15th, the original filing date pursuant to an extension, September 15, 2022, would also be extended to November 15, 2022.

Disaster Relief and 1031 Exchanges

It is important for taxpayers who are utilizing a 1031 exchange (“Exchangers”) to understand the effects of Federally declared disasters like the storms in Kentucky and Missouri on the strict deadlines for completing an IRC Section 1031 exchange.[1]

For delayed or forward exchanges, the 1031 rules set two time periods for a total deadline of 180 calendar days to close escrow on replacement property. The first 45-days are an identification period, in which the taxpayer/Exchanger must identify potential replacement properties. The Exchanger then has 135 days after the end of the identification period in which to purchase their identified replacement property or properties (total 180-day period). Those Exchangers transacting a reverse exchange get 180-days to sell their relinquished property after the transfer of ownership of the parked property to an exchange accommodator.

In the event of a federally declared disaster, an Exchanger may be eligible for an extension of either the 45-day identification deadline, the 180-day period in which to complete an exchange, or both. In general, to qualify for an extension, the deadline must fall on or after the date of the Federally declared disaster. After each specific disaster event, the IRS will publish a Disaster Relief Notice and other guidance generally available on the IRS website’s disaster resources page. For an Exchanger to qualify for an extension provided by an IRS Notice, the Notice must specifically mention Rev. Proc. 2018-58.

These publications specify which counties or states have been affected and the type and duration of relief provided.
Extended Relief per Section 17 of Rev. Proc. 2018-58

Rev. Proc. 2018-58 provides that a taxpayer involved in a 1031 exchange may be eligible for a time extension of the 45-day and the 180-day deadlines for the later of 120 days or the extension date listed on the IRS Notice (previously IRS Rev. Proc. 2007-56, Section 17).[2]

In addition to being an “affected taxpayer,” the Exchanger must have transferred their property to a buyer; or transferred “qualified indicia of ownership” to an Exchange Accommodation Titleholder pursuant to Rev. Proc. 2000-37 (i.e. a reverse exchange) on or before the date of the Federally declared disaster. However, it is important to note that a taxpayer can qualify for relief for a variety reasons, including, but not limited to: the relinquished or replacement property is located in the Federally declared disaster area; the principal place of business of any party to the transaction is located in the disaster area; a lender will not fund the loan due to the disaster; or a title insurance company is not able to provide the necessary insurance policy to settle or close a real estate transaction due to a federally declared disaster.  Therefore, at the discretion of the IRS, an Exchanger can potentially qualify for the relief in Section 17 or other relief in a Notice that applies Section 17 to the disaster, even if all properties involved in the exchange are not in the disaster area.  Based on the wording of the Rev. Proc., we believe that the location of a party, other than the exchanger, by itself will likely not justify relief unless the transaction is also substantially delayed.

Recently, there has been some debate as to the application of IRS Notices that mention Rev. Proc. 2018-58 in whole, but do not specifically mention Section 17. For additional background please see our Disaster Resource Webpage at Legal

Eligibility for disaster extensions could vary on a case-by-case basis and the Covered Disaster Areas specified in IRS guidance are often updated over time. Exchangers and their advisors should carefully review any IRS guidance regarding disaster relief and make any determinations accordingly. When considering the impact of these disasters, it is important to determine if you or one of your clients is an affected taxpayer or otherwise eligible for tax relief, even if located far from the disaster area. If so, you should promptly contact your Section 1031 qualified intermediary.

Additional Notes

  • Tax Relief is automatic for affected taxpayers:The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area should call the IRS disaster hotline at 866-562-5227to request this tax relief.”
  • Extended 1031 Exchange Relief per Rev. Proc. 2018-58, Section 17: this relief only applies where a 1031 exchange was commenced on or before the disaster date specified in the relevant IRS Notice.
  • If you had a valid postponement of a deadline, but still receive a filing or penalty notice in the future: “If an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty. For information on services currently available, visit the IRS operations and servicespage at gov/coronavirus.”
  • Estimated Tax Payments: An important consideration for those taxpayers who have valid filing extensions is that filing extensions do not extend payment deadlines. If a taxpayer’s filing deadlines were originally extended until September 15, 2022 (partnerships) or October 17, 2022 (individuals) and are now extended further to November 15th, they should consider making estimated payments to avoid interest and penalties, if they have not already done so.
  • Volunteers and taxpayers living outside the area may also be eligible for relief: from IR-2022-145In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.”

[1] “Federally declared disasters” = “Presidentially declared disasters.”  Historically, IRS guidance referred to “Presidentially declared disasters” but Rev. Proc. 2018-58 implemented a change in terminology.

[2] Available at:

For the most up to date information on disasters see here:

IRS Tax Relief in Disaster Situations

Legal 1031 Exchange Services, LLC does not provide tax or legal advice, nor can we make any representations or warranties regarding the tax consequences of any transaction. Taxpayers must consult their tax and/or legal advisors for this information. Unless otherwise expressly indicated, any perceived federal tax advice contained in this article/communication, including attachments and enclosures, is not intended, or written to be used, and may not be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.
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