Victims of Floods and Hurricanes Receive Breaks from IRS
The Internal Revenue Service is postponing the time to file certain tax returns, to make certain tax payments and to perform time-sensitive acts for storm, flood, and hurricane victims in presidential disaster areas. These deadlines vary by the affected areas and specific disasters. The postponement provides people affected by the disasters with additional time.
"Our hearts go out to to the people hit by these disasters," IRS Commissioner Doug Shulman said. "We realize that as people put their lives back together, they need additional time to work on these tax issues." "As residents of Louisiana return to their homes following Hurricane Gustav, taxes are one thing they won't need to worry about," IRS Commissioner Doug Shulman said. "This relief gives them extra time to get their lives in order before having to deal with their tax matters." In addition, the IRS will waive the failure to deposit penalties for employment and excise deposits for a short period of time. Specific dates are available on the IRS website.
IRS computer systems automatically identify taxpayers located in the covered disaster area and apply automatic filing and payment relief. Affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request tax relief. If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing or payment due date that falls between the dates for each applicable disaster.
Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. ยง 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose books, records, or tax professionals' offices are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area are eligible for relief. The postponement of time to file and pay does not apply to information returns in the W-2, 1098 or 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. The postponement does not apply to employment and excise tax deposits.
Affected taxpayers in a presidentially declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year's return could result in a greater tax saving, depending on other income factors. Individuals may deduct personal property losses that are not covered by insurance or other reimbursements but they must first subtract $100 for each casualty event and then subtract 10 percent of their adjusted gross income from their total casualty losses for the year. Taxpayers claiming the disaster loss on last year's return should put the Disaster Designation at the top of the form so that the IRS can expedite the processing of the refund. Taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.
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