IRS hurricane relief efforts delayed taxes for millions
The Internal Revenue Service’s disaster relief efforts on behalf of victims of Hurricanes Harvey, Irma and Maria last year were generally successful, according to a new report, postponing tax filings and payments for more than 68 million taxpayers affected by the killer storms.
After President Trump signed major disaster declarations for Florida, Georgia, Louisiana, Puerto Rico, the Seminole Tribe of Florida, South Carolina, Texas and the U.S. Virgin Islands in the wake of a series of devastating hurricanes, the IRS granted tax relief to taxpayers and tax practitioners to help them meet their tax obligations for filing returns or paying taxes.
The Treasury Inspector General for Tax Administration released a report Friday assessing the IRS’s efforts to assist victims of Hurricanes Harvey, Irma and Maria. TIGTA noted that more than 49 million individuals and 19 million businesses were eligible for disaster tax relief in the wake of the hurricanes. That included postponing the dates for filing tax returns and making tax payments. Penalties and interest didn’t accrue on tax returns or payments with an original or extended due date that fell within the postponement period.
The IRS managed to coordinate its efforts to provide tax relief to both individuals and businesses. That meant identifying the areas affected by the disasters and distributing an internal disaster relief memorandum for each disaster declaration. The memorandum spelled out some of the main IRS functions, while providing a summary of the tax relief that should be provided to taxpayers.
The IRS also correctly placed disaster relief freeze codes on 68,635,299 (or 99 percent) of the 68,733,105 eligible taxpayers’ accounts on a timely basis. The codes enable the IRS to do special processing related to any filing payment or interest relief, granted for a geographic area. The IRS provided the tax relief for affected taxpayers until Jan. 31, 2018. However, the IRS has extended the tax relief dates for Puerto Rico and the U.S. Virgin Islands to June 29, 2018 as many parts of the islands have yet to recover from Hurricanes Maria and Irma.
In addition, the report noted, the IRS restored service to taxpayers in areas affected by the hurricanes. The hurricanes affected all counties in Florida, multiple counties in Texas, along with the U.S. Virgin Islands and Puerto Rico. “Taxpayers in these areas could face unique challenges as they attempt to meet their tax obligations, particularly if English is their second language,” said the report. “IRS management indicated that they monitor call volumes on the various telephone lines and, depending on the time of year, staffing availability, and employee skill levels, have some flexibility to reassign work to Spanish applications should the call volume increase.”
IRS officials also indicated that services at Taxpayer Assistance Centers and Volunteer Income Tax Assistance/Tax Counseling for the Elderly sites affected by the hurricanes were restored and made available to assist taxpayers. All the Taxpayer Assistance Centers in the affected areas have re-opened for service.
The report also found the IRS postponed examination activities for 46,570 (or 99.5 percent) of the 46,819 individuals who were under examination at the hurricane strike dates, and for 5,493 (that is, 99.3 percent) of the 5,527 businesses. In addition, the IRS postponed collection activities for 1,723,389 (or 99.9 percent) of the 1,723,695 individuals who were in collection status at the hurricane strike dates, and for 403,792 (or 99.9 percent) of the 403,805 businesses.
“The IRS strives to provide outstanding service and support to the taxpayers impacted by disasters,” wrote Mary Beth Murphy, commissioner of the IRS’s Small Business/Self-Employed Division, in response to the report. “We are committed to continuously look for opportunities for improvement in how we provide disaster assistance moving forward.”