Days after the Internal Revenue Service (IRS) announced tax relief for victims of victims of the Oregon wildfires and straight-line winds, the IRS has announced similar relief for victims of Hurricane Sally. Those taxpayers who were affected by the storm that began on September 14 now have until January 15, 2021, to file individual and business tax returns and make certain tax payments.
Relief is available for taxpayers in any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance. Currently, affected taxpayers are those in Baldwin, Escambia and Mobile counties in Alabama.
The extension applies to deadlines – either an original or extended due date – that occurred on or after September 14, 2020, and before January 15, 2021.
This includes individual taxpayers who live in the area, as well as businesses, including tax-exempt organizations, with a principal place of business in the area. Taxpayers who live and work in locations added later to the disaster area, including those in other states, will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on the IRS website.
Here’s what the relief entails: Most tax filing and payment deadlines that occurred starting on September 14, 2020, will be pushed off until January 15, 2021, to file returns and pay any taxes that were originally due during this period. That includes returns and payments that were originally due during this period, including individual tax returns on extensions which are due on October 15, 2020. Remember, however, that extensions are an extension of the time to file, not the time to pay, so payments for 2019 tax returns are still keyed to the July 15, 2020, due date.
Relief also includes a waiver of late penalties for quarterly estimated income tax payments normally due on September 15, 2020, as well as quarterly federal payroll and excise tax returns normally due on November 2, 2020.
It also includes calendar-year tax-exempt organizations that had a valid extension due to run out on November 16, 2020. Businesses with extensions also have the additional time including, among others, calendar-year corporations whose 2019 extensions run out on October 15, 2020.
Additionally, penalties on payroll and excise tax deposits due on or after September 14 and before September 29, will be abated as long as the deposits are made by September 29, 2020.
The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. That means that taxpayers do not need to contact the IRS to get this relief. However, if you receive a late filing or late payment penalty notice from the IRS and were entitled to relief, you should call the number on the notice to have the penalty abated.
The IRS will work with any taxpayer who lives outside the disaster area but whose records are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 1.866.562.5227. This includes those workers assisting the relief activities who are affiliated with a recognized government or charitable organization.
Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on the return for the year the loss occurred – in this instance, the 2020 return normally filed next year – or the return for the prior year (2019). However, remember that the deduction for personal casualty and theft losses has been repealed for the tax years 2018 through 2025 except for those losses attributable to a federal disaster as declared by the President. That means you need to write the FEMA declaration number – 4563 − for Hurricane Sally on any return claiming a loss. For more on casualty losses after a disaster, click here.
For more details on available tax relief, you can also check out the disaster relief page on IRS.gov.