Victims of Hurricane Isaac may qualify for tax relief from the IRS. After FEMA (Federal Emergency Management Agency) issued disaster declarations for individual assistance, the IRS announced September 7, 2012 that affected taxpayers in Louisiana will receive tax relief, and based on additional damage assessments by FEMA other locations may be added in coming days.
Covered Disaster Areas
The President has declared the parishes of Ascension, Jefferson, Lafourche, Livingston, Orleans, Plaquemines, St. Bernard, St. Charles, St. John the Baptist and St. Tammany federal disaster areas. Individuals who have a business or reside in these areas may qualify for tax relief. The President’s declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster areas.
· Deadlines falling on or after August 26, 2012 and on or before January 11, 2013, have been postponed until January 11, 2013.
o This includes quarterly estimated tax payments that are due on September 17, 2012.
· The IRs is also waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after August 26, 2012, and on or before September 10, 2012. This is as long as the deposits are made by September 10, 2012.
The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But 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 this tax relief.
· Taxpayers considered to be affected taxpayers, include individuals who live, and businesses whose principal place of business is located, in the covered disaster area and are eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers.
· Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline are in the covered disaster area, are also entitled to relief.
· All relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area that was killed or injured as a result of the disaster are entitled to relief.
If you are an affected taxpayer and you receive a penalty notice from the IRS, you should call the telephone number provided on the notice in order to have the IRS stop any interest and any late filing or late payment penalties that would otherwise apply.
· Penalties or interest will only be stopped for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.
The IRS gives affected taxpayers until January 11, 2013, to file most tax returns. Affected taxpayers are also given until January 11, 2013 to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Aug. 26 and on or before Jan. 11, 2013.
· The affected tax returns include individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns.
· The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 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.
Affected taxpayers in a federally 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.
· Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “LOUISIANA/HURRICANE ISAAC” at the top of the form so that the IRS can expedite the processing of the refund.
Additional Relief Provided By The IRS
· The IRS will waive the usual fees and rush requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation 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.
Affected 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.