IRS provides tax breaks for recent disasters

The IRS recently announced that victims of the August California Wildfires have until Dec. 15, 2020, to file various individual and business tax returns, and make certain tax payments. Similarly, victims of Hurricane Laura have until Dec. 31, 2020 to file their returns and make payments.

California wildfires

The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance. Currently this includes Lake, Monterey, Napa, San Mateo, Santa Cruz, Solano, Sonoma, and Yolo counties in California, but taxpayers in localities added later to the disaster area will automatically receive the same filing and payment relief. The current list of eligible localities is available on the disaster relief page on IRS.gov.

• 2019 Extended Individual Tax Returns: An additional filing extension is granted to individual taxpayers who filed valid 2019 tax extensions with an Oct. 15, 2020, tax deadline. The IRS noted, however, that because tax payments related to these 2019 returns were due on July 15, 2020, those payments are not eligible for this relief.
• 2020 Quarterly Estimated Tax Payments: The third quarterly estimated tax deadline of Sept. 15, 2020, is extended until Dec. 15, 2020.
• Quarterly Payroll and Excise Tax Returns: Quarterly payroll and excise tax returns that are due Oct. 31, 2020, are also extended until Dec.15, 2020.

Calendar-year tax-exempt organizations whose extensions were to run out on Nov. 15, 2020, also qualify for the extra time.

Hurricane Laura

Some of the same extensions apply to victims of Hurricane Laura, but others are different. Following the destruction caused by Hurricane Laura, the IRS announced tax relief for those impacted, and in any area designated by FEMA, as qualifying for individual assistance. This includes Allen, Beauregard, Calcasieu, Cameron, Jefferson Davis, and Vernon parishes in Louisiana. Taxpayers in localities added later to the disaster area will automatically receive the same filing and payment relief.

These include:

• <2019 Extended Individual Tax Returns: An additional filing extension is granted to individual taxpayers who filed valid 2019 tax extensions with an Oct. 15, 2020, tax deadline. The IRS noted, however, that because tax payments related to these 2019 returns were due on Jul. 15, 2020, those payments are not eligible for this relief.
• 2020 Quarterly Estimated Tax Payments: The third quarterly estimated tax deadline of Sept. 15, 2020, is extended until Dec. 15, 2020.
• Quarterly Payroll and Excise Tax Returns: Quarterly payroll and excise tax returns that are due Nov. 2, 2020, are extended until Dec. 31, 2020. In addition, penalties on payroll and excise tax deposits due after Aug. 22 and before Sept. 8, will be abated as long as the deposits are made by Sept. 8, 2020.

Calendar-year tax-exempt organizations whose extensions were to run out on Nov. 15, 2020, also qualify for the extra time.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. As a result, taxpayers do not need to contact the IRS to get this relief. However, 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 falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area, but whose records necessary to meet a deadline occurring during the postponement period are located in an affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Taxpayers also need advice on reconstructing records lost in a natural disaster. The IRS provided tips and guidance on how you can help your clients reconstruct important records.