Question: Is there any federal tax relief available to victims of the recent hurricanes?
Answer: The Internal Revenue Service recently announced special tax relief for Florida taxpayers in designated areas that were struck by Hurricane Frances, and has lengthened the extension period granted earlier for areas hit by Bonnie and Charley. The designated disaster area consists of 42 counties and includes Brevard, Lake, Orange, Osceola, Polk, Seminole and Volusia.
Taxpayers -- individuals or businesses -- either 1) located in the affected areas, 2) whose tax records are located in the affected areas, or 3) who are relief workers, generally will have until Dec. 30 to file returns and submit payments. The IRS will also abate interest and certain penalties that would otherwise apply.
The IRS has specifically provided that the federal tax deposit (FTD) penalty waiver period for employment and excise tax deposits is Sept. 3-20, and the extension period for returns and other tax payments is Sept. 3-Dec. 30.
The IRS is giving affected taxpayers until the last day of these extension periods to file returns or make payments (including estimated tax payments) where the original (or extended) due date for filing or paying fell within these periods. The IRS will abate interest and any late filing or late payment penalties that would apply during these dates to returns or payments subject to these extensions.
However, the extension of time to file and pay does not apply to information returns, or employment and excise tax payments.
The IRS may abate penalties for affected taxpayers on such deposits due to reasonable cause during the FTD penalty waiver period, if payment is made by the last day of that period. Taxpayers may also seek penalty abatements on a case-by-case basis where specific circumstances prevent them from making tax payments within the extension period.
To qualify for the relief, affected taxpayers should put the assigned disaster designation, "Hurricane Frances," in red ink at the top of the return (except for Form 5500, where filers should check Box D in Part 1 and attach a statement, following the form's instructions). If taxpayers located in the designated areas receive penalties for filing or paying late they should contact the IRS ( http://www.irs.gov).
Taxpayers also have the option of claiming disaster-related casualty losses on their federal income tax return for either 2004 or 2003 with certain limitations and deductions. The IRS Publication on Casualties, Disaster, and Thefts (No. 547) has details on how to figure and claim a disaster loss. Also, Disaster Loss Kit for Individuals (No. 2194) and Disaster Loss Kit for Businesses (No. 2194B) contain various other publications and forms related to claiming disaster losses.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
