The Internal Revenue Service is offering tax relief to victims of Hurricane Maria in Puerto Rico, along with victims of the other recent monster storms, Harvey and Irma.
Hurricane Maria devastated Puerto Rico last week and left behind widespread power outages and shortages of water, food and other supplies. The IRS said individuals who reside or have a business in any of the 78 municipalities in Puerto Rico may qualify for tax relief.
The presidential disaster declaration allows the IRS to postpone certain deadlines for taxpayers who live in or have a business in the disaster area. Some of the deadlines falling on or after Sept. 17, 2017 and before Jan. 31, 2018, get extra time to file through Jan. 31, 2018. With some exceptions, many of these deadlines were postponed by the IRS following the disaster declaration for Hurricane Irma for some municipalities, which also hit Puerto Rico in recent weeks.
The relief includes taxpayers who had a valid extension to file their 2016 return that was due to run out on Oct. 16, 2017. It also encompasses the quarterly estimated income tax payments due on Jan. 16, 2018, and the quarterly payroll and excise tax returns typically due on Oct. 31, 2017. It also includes tax-exempt organizations that operate on a calendar-year basis and had an automatic extension due to run out on Nov. 15, 2017. In addition, penalties on payroll and excise tax deposits due on or after Sept. 17, 2017, and before Oct. 2, 2017, will be abated as long as the deposits are made by Oct. 2, 2017.
If affected taxpayers get a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date occurring within the postponement period, they should call the phone number on the notice and the IRS will abate the penalty.
The IRS pointed out that it automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who live in or have a business located outside the covered disaster area should call the IRS disaster hotline at (866) 562-5227 to ask for the tax relief.
The affected taxpayers include people who live in the disaster area, and businesses (including tax-exempt organizations) whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records are needed to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster 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 the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.
The IRS is giving affected taxpayers until Jan. 31, 2018, to file most types of tax returns (such as individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, trust returns; estate, gift, and generation-skipping transfer tax returns; annual information returns of tax-exempt organizations; and employment and certain excise tax returns), that have either an original or extended due date happening on or after Sept. 17, 2017, and before Jan. 31, 2018. Affected taxpayers that have an estimated income tax payment originally due on or after Sept. 17, 2017, and before Jan. 31, 2018, won’t be subject to penalties for failure to pay estimated tax installments as long as such payments are paid on or before Jan. 31, 2018.
The relief also includes the filing of Form 5500 series returns that needed to be filed on or after Sept. 17, 2017, and before Jan. 31, 2018.
Taxpayers in the disaster area also have the option of claiming disaster-related casualty losses on their income tax return for either the year when the event occurred, or the previous year. See Publication 547 for details.
Affected taxpayers claiming the disaster loss on a 2016 return should put the Disaster Designation, “Puerto Rico, Hurricane Maria” at the top of the form so that the IRS can expedite the processing of the refund.
The IRS said it will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should write the assigned Disaster Designation “Puerto Rico, Hurricane Maria.” 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 also explain how the disaster affects them so the IRS can give due consideration to their case. Taxpayers can download forms and publications from the official IRS website, irs.gov, or order them by calling 800-829-3676. The IRS’s toll-free number for asking general tax questions is (800) 829-1040.
Also see the IRS Hurricane Maria Information Center that the IRS has set up on its website.
Relief for Hurricane Irma and Harvey Victims
The IRS is also continuing to offer tax relief for victims of Hurricanes Harvey and Irma in addition to Maria. In general, the IRS said it is now providing relief to individuals and businesses anywhere in Florida, Georgia, Puerto Rico and the Virgin Islands, along with parts of Texas. The relief postpones various tax deadlines, giving individual and business taxpayers until Jan. 31, 2018 to file any returns and pay any taxes due. Those eligible for the extra time include:
• Individual filers whose tax-filing extension runs out on Oct. 16, 2017. Because tax payments related to these 2016 returns were originally due on April 18, 2017, those payments are not eligible for this relief.
• Business filers, such as calendar-year partnerships, whose extensions ran out on Sept. 15, 2017.
• Quarterly estimated tax payments due on Sept. 15, 2017 and Jan. 16, 2018.
• Quarterly payroll and excise tax returns due on Oct. 31, 2017.
• Calendar-year tax-exempt organizations whose 2016 extensions run out on Nov. 15, 2017.
See the disaster relief page on IRS.gov for details about the other kinds of tax relief furnished by the IRS in response to the recent hurricanes. The IRS said it is continuing to closely monitor the aftermath of the various storms, and more updates for taxpayers and tax professionals will be posted to IRS.gov
Besides additional time to file and pay, the IRS provides other special assistance to disaster-area taxpayers, including:
• Special relief helps employer-sponsored leave-based donation programs aid hurricane victims. Under these programs, employees can decide to forgo their vacation, sick or personal leave in exchange for cash payments the employer makes, before Jan. 1, 2019, to charities offering relief. Donated leave isn't included in the employee’s income, and employers can deduct these cash payments to charity as a business expense.
• 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to hurricane victims and members of their families. Under this broad-based relief, a retirement plan can allow a hurricane victim to take a hardship distribution or borrow up to the specified statutory limits from the victim’s retirement plan. It also means that a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or dependent who lived or worked in the disaster area. Hardship withdrawals must be made by Jan. 31, 2018.
• The IRS is waiving late-deposit penalties for federal payroll and excise tax deposits normally due during the first 15 days of the disaster period. See the disaster relief page for the time periods that apply to each jurisdiction.
• Individuals and businesses who have suffered uninsured or unreimbursed disaster-related losses can opt to claim them on either the return for the year the loss occurred (in this instance, the 2017 return normally filed next year), or the return for the prior year (2016). See Publication 547 for details.
• The IRS is waiving the typical fees and expediting requests for copies of previously filed tax returns for disaster area taxpayers. The relief can be particularly helpful to anyone whose copies of these documents were lost or destroyed by the hurricane.
• If disaster-area taxpayers are contacted by the IRS on a collection or examination matter, they should be sure to explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.
More details on these and other relief provisions can be found on the IRS’s disaster relief page, along with special pages that have been set up for Hurricane Harvey, and Hurricanes Irma and Maria. For general information on disaster recovery, visit disasterassistance.gov.
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