Tax Relief for Victims of Hurricane Irene

Victims of Hurricane Irene in late August may qualify for tax relief from the Internal Revenue Service (IRS). A declaration from the President as a federal disaster area permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster areas*.

For instance, certain deadlines falling on or after August 25 (August 27 for Connecticut and Massachusetts, August 29 for Vermont), and on or before October 31, have been postponed to October 31, 2011. This includes corporations and other businesses that previously obtained an extension until September 15 to file their 2010 returns, and individuals and businesses that received a similar extension until October 17. It also includes the estimated tax payment for the third quarter, normally due September 15.

Other Affected Taxpayers

Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1 (c) are in the covered 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 and any individual visiting that area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until October 31 to file most tax returns, (including 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), or to make tax payments, including estimated tax payments that have either an original or extended due date occurring on or after August 25 and on or before October 31.

The IRS also gives affected taxpayers until October 31 to perform other time-sensitive actions described in Treasury Regulation § 301.7508A-1(c)(1) and Revenue Procedure 2007-56, 2007-34 I.R.B. 388 (August 20, 2007), that are due to be performed on or after August 25, and on or before October 31.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Revenue Procedure 2007-56. The relief described in section 17 of Revenue Procedure 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

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 time file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after August 25 and on or before September 9 provided the taxpayer makes these deposits by September 9.

Note

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, payment, or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

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.

Casualty Losses

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.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Other Relief

The IRS will waive the usual fees and expedite 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.

Taxpayers may download forms and publications from this website, irs.gov. The IRS toll-free number for general tax questions is 1.800.829.1040.

*The following counties in:
1. Connecticut: Fairfield, Hartford, Litchfield, Middlesex, New Haven, New London, Tolland, and Windham
2. Massachusetts: Berkshire and Franklin
3. New Hampshire: Carroll and Grafton
4. New Jersey: Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union and Warren
5. New York: Albany, Delaware, Dutchess, Essex, Green, Schenectady, Schoharie, and Ulster
6. North Carolina: Beaufort, Bertie, Brunswick, Camden, Carteret, Chowan, Craven, Currituck, Dare, Duplin, Edgecombe, Gates, Greene, Halifax, Hertford, Hyde, Johnston, Jones, Lenoir, Martin, Nash, New Hanover, Northampton, Onslow, Pamlico, Pasquotank, Pender, Perquimans, Pitt, Tyrrell, Vance, Warren, Washington, Wayne, and Wilson
7. Pennsylvania: Bucks, Chester, Delaware, Lehigh, Luzerne, Monroe, Montgomery, Northampton, Philadelphia, Sullivan, and Wyoming
8. Vermont: Addison, Bennington, Caledonia, Chittenden, Orange, Rutland, Washington, Windham, and Windsor
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9. The following municipalities of Purerto Rico: Arroyo, Aguas Buenas, Caguas, Canóvanas, Carolina, Cayey, Cidra, Coamo, Comerío, Fajardo, Gurabo, Humacao, Jayuya, Juncos, Las Piedras, Loíza, Luquillo, Naguabo, Naranjito, Orocovis, Patillas, Ponce, Río Grande, San Juan, San Lorenzo, Trujillo Alto, Vega Baja, Vieques, and Villalba