IRS Grants Tax Relief to Hurricane Irma Victims in Florida

Synopsis

On Tuesday, September 12, 2017, the IRS announced (IR 2017-150) that taxpayers in parts of Florida impacted by Hurricane Irma will now have until January 31, 2018, to file various tax returns and make certain tax payments. The tax relief parallels the relief granted last month to victims of Hurricane Harvey, see our prior tax alert. The special tax relief includes, for individual taxpayers with valid extensions through October 16, and business taxpayers with extensions through September 15, additional time to file the tax returns that were otherwise due. In addition to the Federal tax relief granted, we expect states to offer similar filing and tax payment relief to taxpayers impacted by Hurricane Irma.

Counties Eligible for Relief

The IRS is offering tax relief, more fully discussed below, to any area the Federal Emergency Management Agency (FEMA) designated as qualifying for individual assistance. Currently, parts of Florida, Puerto Rico (municipalities of Culebra and Vieques), and the U.S. Virgin Islands are eligible for special tax relief. Taxpayers in localities added later to the disaster area, including those in other states, will automatically receive the same filing and payment relief. We will update the list of affected counties as more information becomes available. At this time, the following Florida counties automatically qualify for tax relief:

The IRS has also stated that it 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 should contact the IRS at 866-562-5227. Additionally, workers assisting in the relief activities who are affiliated with a recognized government or philanthropic organization are eligible for relief as well. 

Summary of Relief

The IRS will automatically provide filing and penalty relief to any taxpayer with an IRS address of record located in a disaster area. Therefore, taxpayers do not need to contact the IRS to receive the special tax relief. If a 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 falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

Tax Relief

The tax relief postpones various tax filing and payment deadlines occurring on or after September 4, 2017. Taxpayers will have until January 31, 2018, to file most returns and pay taxes for:

Individual, corporate, estate and trust income tax returns

Partnership returns, S corporation returns, trust returns

Estate, gift, and generation-skipping transfer tax returns

Annual information returns for tax-exempt organizations

Employment and certain excise tax returns

These taxes must have either an original or extended due date occurring on or after September 4, 2017, and before January 31, 2018. Tax relief is also granted for quarterly estimated income tax payments originally due on September 15, 2017, and January 16, 2018. The deadline for making these quarterly estimated payments is now January 31, 2018. For individual taxpayers, this includes 2016 income tax returns on valid extension, i.e., October 16, 2017. However, the IRS noted that because the 2016 individual income tax payments related to these returns were originally due on April 18, 2017, payments for such taxes are not eligible for relief.

The tax relief also includes the filing of Form 550 series returns.  However, the extension of time to file and pay does not apply to information returns in the W-2, 1094, 1095, 1097, 1098 or 1099 series, to Forms 1042-S, 3921, 3922, 8025, or 8027, or to employment and excise tax deposits. However, penalties on deposits due on or after September 4, 2017, and before September 19, 2017, will be abated as long as the tax deposits are made by September 19, 2017.

Casualty Losses

Affected taxpayers in designated disaster areas suffering uninsured or unreimbursed disaster-related losses have the option of claiming disaster–related casualty losses on their federal income tax return for either the year in which the event occurred, or the prior year. Affected taxpayers should consult with their tax advisor to determine how the casualty loss rules apply to their specific situation.

Other Relief

The IRS will waive the customary fees and expedite requests for copies of previously filed tax returns for affected taxpayers.  Taxpayers should put the  assigned Disaster Designation “Florida, Hurricane Irma” in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

What Does CohnReznick Think?

Affected taxpayers who live within a federally designated disaster area should avail themselves of the additional time to file or pay certain taxes. Additionally, care and thought should be given to what year a casualty loss deduction is taken.  In addition to the federal tax relief noted above, many states often provide similar relief to impacted taxpayers. We expect Florida and other states to provide comparable tax relief to taxpayers affected by Hurricane Irma in the days and weeks to come.  As details regarding additional tax relief become available, we will issue subsequent alerts.

Contact

For more information, please contact your CohnReznick client services team member.