The IRS has announced forms of due date and other relief for individuals impacted by Hurricane and Tropical Storm Harvey in Houston and surrounding areas, with relief later provided for victims of Hurricane Irma in Florida and Puerto Rico.
The IRS has announced information related to relief provided under IRC §7508A for performing certain acts in News Release IR-2017-135. IRC §7805A provides that the IRS may authorize a delay of up to one year to allow taxpayers to perform certain acts when the taxpayer is affected by a federally declared disaster or terroristic or military action. Similar relief was extended to taxpayers in Florida and Puerto Rico affected by Hurricane Irma in News Release 2017-150.
The areas eligible for relief can be found on the IRS Disaster Relief web page.
The IRS relief is automatically granted to any taxpayer with an address of record located in the disaster area. Those who live outside the disaster area but whose records are located within the disaster area and relief workers working with a recognized organization need to contact the IRS at 866-562-5227 to discuss relief.
The IRS describes the affected tax deadlines for those affected by Hurricane Harvey:
The tax relief postpones various tax filing and payment deadlines that occurred starting on Aug. 23, 2017. As a result, affected individuals and businesses will have until Jan. 31, 2018, to file returns and pay any taxes that were originally due during this period. This includes the Sept. 15, 2017 and Jan. 16, 2018 deadlines for making quarterly estimated tax payments. For individual tax filers, it also includes 2016 income tax returns that received a tax-filing extension until Oct. 16, 2017. The IRS noted, however, that because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.
A variety of business tax deadlines are also affected including the Oct. 31 deadline for quarterly payroll and excise tax returns. In addition, the IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due on or after Aug. 23 and before Sept. 7, if the deposits are made by Sept. 7, 2017. Details on available relief can be found on the disaster relief page on IRS.gov.
The relief for Irma is similar, though the dates are revised to affect the dates that disaster areas were declared for that storm. The same January 31, 2018 deadline is available for filing returns due after September 4, 2017 in Florida and September 5, 2017 in Puerto Rico. The payroll tax deposit date is pushed back to 15 days after the above dates for those affected by Irma.
The news relief also reminds taxpayers that suffered uninsured disaster-related losses may claim elect to claim the losses on their return for the year of loss (2017) or the previous year (2016). See IRC §165(I) and Temporary Reg. §1.165-11T for information on this option. Advisers should point to affected clients that even personal casualty losses may be used in the computation of a federal net operating loss available for carryback (IRC §172(d)(4)(C)).
Similarly, a three year net operating loss carryback period (rather than the standard two year periods) is available for
- Net operating losses arising from a casualty losses of an individual (IRC §172(b)(1)(E)(ii)(I)) and
- Net operating losses of a “small business” attributable to a federally declared disaster (IRC §172(b)(1)(E)(ii)(II).
For this purpose, a “small business” is generally one that has average gross receipts for the prior three years of less than $5,000,000. (IRC §172(b)(1)(E)(iii) ; IRC §448(c))