Hurricane Tax Relief Provided by IRS, DOL, FinCEN

By Stanley Rose September 13, 2017

The next few days and weeks hold a number of tax return filing and payment deadlines. Meeting those deadlines may be impossible for residents and others affected by the recent hurricanes that devastated parts of Texas and Florida, so the federal government has provided extensions to taxpayers based in specified, affected areas. These concessions are provided separately by various agencies, including the Internal Revenue Service, Department of Labor, and Financial Crimes Enforcement Network.

The extensions generally apply to returns and payments that otherwise would be due during the period beginning on August 23, 2017 for Harvey victims, or September 4, 2017 for Irma victims, and ending on January 16, 2018 for both. A synopsis and links to more details are provided below.

Initial steps

Readers who think they may be eligible for filing or payment relief should review the source documents in the categories provided below to ensure eligibility. Note that returns that are delayed may need specific language or attachments added when filed, to let the IRS know that late payment or filing penalties should not apply. Begin by answering two questions:

1. Is my place of residence or business located in a Presidentially declared disaster area? This generally requires having an “address of record” located in one of the areas affected by the storms. (See more details in the categories below.) Lists of counties and other areas eligible for relief are provided on the IRS website. Those who are located in eligible areas qualify for automatic extensions of deadlines, as explained further in the sections below.
2. Are my records located in a Presidentially declared disaster area? Those who do not reside or have a business located in a Presidentially declared disaster area do not qualify for automatic relief as described above. However, if records or other documents are located in the disaster area, and inability to access those records will impact timely filing, similar relief may be available. That relief is not automatic, and must be requested on a case-by-case basis by contacting the appropriate government agency. (See more details in the categories below.)

Types of filings/payments that may be eligible for relief

Corporate and individual income tax returns and estimated tax payments

Generally, any tax returns or estimated tax payments that were due initially or via valid extension from August 23 or September 4, 2017, respectively, for Harvey and Irma victims, through January 31, 2018, are extended until January 31, 2018. This includes income tax returns such as Forms 1040, 1065, 1120, 1120S, and 990. Third quarter individual estimated tax payments normally due September 15 also qualify, as do the fourth quarter payments otherwise due January 16. The October 31 deadline for payroll tax filings is also extended, and certain late-deposit penalties for federal payroll and excise tax deposits may be waived for deposits due within 15 days of the disaster.

For more information, please read IRS News Release IR-2017-150 (Irma) or IR-2017-135 (Harvey).

FBARs (Report of Foreign Bank and Financial Accounts)

2016 Forms FinCEN 114, reporting certain foreign bank and other account holdings, are due on October 16, 2016. This is the first year the October deadline applies; historically June 30 was the deadline. Those eligible for relief due to the hurricanes now have until January 31, 2018 to file 2016 Form FinCEN 114.

For more information, please read FinCEN’s Notice dated September 12, 2017.

Defined Benefit Plan Funding Deadlines

Certain funding payment and election deadlines that fall within the period beginning August 23, 2017, for Harvey victims, or September 4, 2017, for Irma victims, and ending January 31, 2018, will be due on January 31, 2018.

The relief applies only to certain plans, and additional information can be found in IRS Notice 2017-49.

Casualty losses

Losses from property damage can qualify for tax deductions, subject to certain limits. While such deductions generally are claimed on the tax return for the year in which the loss occurred, special rules apply to federally-declared disaster areas. Those rules allow the deduction to be reported on the year prior to the loss, on either an original or amended return. By utilizing a 2016 return, the victim avoids the need to wait until a 2017 tax return is filed, and potentially receives a much-needed refund significantly earlier. More information can be found in a previous BNN article and in IRS Publication 547.

Conclusion

Victims of the recent hurricanes undoubtedly have a lot more to worry about than taxes, and the extensions provided by various federal government agencies are appropriate and needed. Some state agencies, although not covered in this alert, are beginning to take action, and readers who plan to utilize the federal extensions need to address any state filings separately, as federal extensions may not necessarily apply to state filings.

For those readers who have been affected by these storms, we hope this information is helpful, and our thoughts and prayers are with you.

If you have any questions, please contact Stan Rose or your BNN tax advisor at 1.800.244.7444.