The Internal Revenue Service is offering tax relief for victims of Hurricane Irma, granting additional time to file tax returns and make payments for victims in the Virgin Islands, with similar relief expected for victims in Florida and other states as well as the storm moves further north.
President Trump declared last week that a major disaster exists in the territory of the U.S. Virgin Islands, and the IRS granted tax relief Friday to affected taxpayers in the U.S. Virgin Islands. The IRS is also likely to announce relief by the end of the day Monday for Florida victims, according to a spokesperson contacted by Accounting Today. The IRS has set up a web page for the disaster with up-to-date information on help for victims of Hurricane Irma.
The storm caused heavy damage in the Virgin Islands and other islands in the Caribbean last week before slamming into Florida over the weekend. Millions of residents and businesses remained without electricity Monday after the storm left streets flooded in cities including Miami, Naples, Tampa and Jacksonville. The storm has also stretched as far north as Georgia and the Carolinas.
Taxpayers who live on the islands of St. John and St. Thomas or have a business there may qualify for tax relief, the IRS noted. The disaster declaration allows the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. That means for deadlines falling on or after Sept. 6, 2017 and before Jan. 31, 2018, taxpayers will get some extra time to file through Jan. 31, 2018. That includes taxpayers who had a valid extension to file their 2016 return that was due to run out on Oct. 16, 2017. It also includes the quarterly estimated income tax payments originally due on Sept. 15 2017 and Jan. 16, 2018, and the quarterly payroll and excise tax returns normally due on Oct. 31, 2017.
It also includes tax-exempt organizations that operate on a calendar-year basis and had an automatic extension that was due to run out on Nov. 15, 2017. On top of that, the IRS said penalties on payroll and excise tax deposits due on or after Sept. 6, 2017, and before Sept. 21, 2017, will be abated as long as the deposits are made by Sept. 21, 2017.
If an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty.
The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. Affected taxpayers who live in or have a business located outside the covered disaster area need to call the IRS disaster hotline at 866-562-5227 to ask for the tax relief.
The flexibility applies to taxpayers who reside in or have a business in the disaster area, along with relief workers who are affiliated with a recognized government or philanthropic organization helping with the relief activities in the covered disaster area, plus any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.
The IRS gives affected taxpayers until Jan. 31, 2018, to file most tax returns (including 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 occurring on or after Sept. 6, 2017, and before Jan. 31, 2018. Affected taxpayers that have an estimated income tax payment originally due on or after Sept. 6, 2017, and before Jan. 31, 2018, will not 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 IRS also gives affected taxpayers until Jan. 31, 2018 to perform other time-sensitive actions that are supposed to be performed on or after Sept. 6, 2017, and before Jan. 31, 2018.
This relief also includes the filing of Form 5500 series returns, which were supposed to be filed on or after Sept. 6, 2017, and before Jan. 31, 2018.
Unless an act is specifically listed in Rev. Proc. 2007-56, the postponement of time to file and pay doesn’t apply to information returns in the W-2, 1094, 1095, 1097, 1098, or 1099 series; to Forms 1042-S, 3921, 3922, 8025, or 8027; or to employment and excise tax deposits. However, penalties on deposits due on or after Sept. 6, 2017, and before Sept. 21, 2017, will be abated as long as the tax deposits are made by Sept. 21, 2017, according to the IRS.
Affected taxpayers in a federally declared disaster area also have the option of claiming disaster-related casualty losses on their federal income tax return for either the year in which the event occurred, or the prior year. Publication 547 offers more details.
Affected taxpayers claiming the disaster loss on a 2016 return should put the Disaster Designation, “U.S. Virgin Islands, Hurricane Irma” at the top of the form so that the IRS can expedite the processing of the refund. A similar formulation is likely for Florida taxpayers.
The IRS said it 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 “U.S. Virgin Islands, Hurricane Irma.” 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. Again, Florida victims would presumably write in similar information for their state.
The IRS said affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so the IRS can give appropriate consideration to their case.
Diesel Fuel Penalty Relief
As in the case recently with Hurricane Harvey, the IRS is also responding to shortages of undyed diesel fuel caused by Hurricane Irma, and said Monday it will not impose a penalty when dyed diesel fuel is sold for use or used on the highway in the state of Florida.
This relief is effective as of Sept. 6, 2017. In line with the Environmental Protection Agency waiver for Florida regarding use of Non-Road Diesel Locomotive and Marine Fuel, the relief will remain in effect through Sept. 22, 2017.
The penalty relief is available to anybody who sells or uses dyed fuel for highway use. In the case of the operator of the vehicle in which the dyed fuel is used, the relief is available only if the operator or the person selling the fuel pays the tax of 24.4 cents per gallon that is normally applied to diesel fuel for highway use. The IRS said it will not impose penalties for failure to make semimonthly deposits of this tax. IRS Publication 510, Excise Taxes, has information on the proper method for reporting and paying the tax.
Dyed diesel fuel usually isn’t taxed because it’s sold for uses exempt from excise tax, such as to farmers for farming purposes, for home heating use and to local governments for buses.
Consistent with the EPA waiver, the IRS pointed out the waiver doesn’t apply to the Tax Code penalty for using adulterated fuels that do not comply with applicable EPA regulations. Therefore, diesel fuel with sulfur content higher than 15 parts-per-million may not be used in highway vehicles.
The IRS said it is closely monitoring the situation and will provide additional relief as needed.
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