In the wake of Sandy, the IRS has unveiled programs to help victims of the hurricane.
The service announced an expedited review and approval process for organizations seeking tax-exempt status in order to provide relief for victims of Sandy. Organizations should apply for tax-exempt status by filing Form 1023 and write at the top "Disaster Relief, Hurricane Sandy." The IRS says it will give these applications "expedited attention and ensure they meet the legal requirements for tax exemption."
Organizations that have already submitted an application can fax a request labeled "Disaster Relief, Hurricane Sandy" that includes the organization's name, Employer Identification Number, contact name and phone number to (513) 263-4554.
In addition, the IRS also will waive low-income housing tax credit rules that prohibit owners of low-income housing from providing housing to victims of Sandy who do not qualify as low-income. After Sandy, the Treasury Department and the IRS temporarily suspended income limitation requirements and non-transient requirements for qualified low-income housing projects that provide housing to victims.
After disaster declarations in Connecticut, New York and New Jersey made federal funding available to affected individuals through FEMA, assistance can include grants for temporary housing and home repairs, low-cost loans to cover uninsured property losses and other programs. FEMA has also approved Transitional Sheltering Assistance in New York and New Jersey for eligible survivors who cannot return to their homes "for an extended period of time."
The IRS also announced that its employees may donate vacation, sick or personal leave in exchange for employer cash payments made to qualified tax-exempt organizations providing relief for the victims. Employees can forgo leave in exchange for employer cash payments made before Jan. 1, 2014. The donated leave will not be included in the income or wages of the employees. Employers will be permitted to deduct the amount of the cash payment. (It also announced guidance in Notice 2012-69 on the tax treatment employers should apply to similar leave-donation programs.)