Practice and Procedure: States Keep Taxpayers Afloat By Providing Tax Relief for Harvey and Irma Victims


 

Hurricane Harvey TX

Florida, Puerto Rico, Texas, and the Virgin Islands are still reeling from the devastating impact of Hurricanes Harvey and Irma. In an effort to provide much needed support to taxpayers affected by these natural disasters, the IRS released IR-2017-135 and IR-2017-150, outlining the federal tax relief available. Many states have also released information on the forms of tax relief that they will be offering. 

For taxpayers affected by the hurricanes, the IRS has extended deadlines for filing applicable individual and business tax returns and making tax payments to Jan. 31, 2018. Relief is available for areas that qualify for individual assistance by the Federal Emergency Management Agency (FEMA). Deadlines that fall within this extension include:

  • Individual filers with income tax filing extensions ending Oct. 16, 2017 (the extension does not apply to tax payments originally due by April 18, 2017);  

  • Business taxpayers with valid extensions ending Sept. 15, 2017;

  • Quarterly estimated tax payments due Sept. 15, 2017 and Jan. 16, 2018;

  • Quarterly payroll and excise tax returns due by Oct. 31, 2017;

  • Calendar-year partnerships with 2016 extensions ending Sept. 15, 2017; and

  • Calendar-year tax-exempt organizations with 2016 extensions ending Nov. 15, 2017.

Hurricane Harvey relief applies to tax filing and payment deadlines beginning Aug. 23, 2017. The IRS also waived late-deposit penalties for federal payroll and excise tax deposits normally due on or after Aug. 23, 2017, and before Sept. 7, 2017, if the deposits were made by Sept. 7, 2017.

Irma relief applies to tax filing and payment deadlines beginning Sept. 4, 2017, in Florida, and Sept. 5, 2017, in Puerto Rico and the Virgin Islands. As with Harvey, the IRS will waive late-deposit penalties for federal payroll and excise tax deposits due during the first 15 days of the disaster period.

Numerous states have released notices of their intent to follow the IRS and offer similar tax relief measures. Some states are also choosing to temporarily suspend International Registration Plan (IRP) and International Fuel Tax Agreement (IFTA) requirements for motor vehicles engaged in interstate disaster relief efforts in the designated states or traveling through specified states as part of the disaster relief efforts.

Here is a list of the relief Texas is offering hurricane victims:

  • Collection of state or local hotel or motel occupancy taxes is suspended for 30 days beginning Aug. 23, 2017, through Oct. 23, 2017;
  • 2017 franchise tax reports with extensions ending Nov. 15, 2017, are granted an automatic extension to Jan. 5, 2018 (taxpayers need not request the extension);
  • Sales and use tax reports not required to be filed electronically are granted an automatic 30-day extension (August monthly reports are due Sept. 20, 2017 and quarterly reports are due Oct. 20, 2017);
  • Taxpayers required to file electronically may request a 30-day extension to file since they will not receive an automatic extension; and
  • IFTA requirements, including tax payments, licensing and permit requirements, are temporarily waived through Sept. 30, 2017.

Florida is offering the following relief as a result of Hurricane Irma:

  • Corporate income tax returns and installment payments with due dates between Sept. 4, 2017, and Jan. 31, 2018, will be due Feb. 15, 2018; and
  • Electronic filing requirements for the August 2017 reporting period are extended to Sept. 28, 2017 at 5:00 p.m.

Additionally, in Florida, August 2017 reporting period due dates are extended to Sept. 29, 2017, for sales and use taxes, lead-acid battery fees, motor fuels taxes, new tire fees, rental car surcharges, tourist development taxes, prepaid wireless E-911 fees, motor vehicle warranty fees, and the Miami-Dade lake belt mitigation fee.

Puerto Rico and the Virgin Islands were also heavily impacted by Hurricane Maria beginning Sept. 17, 2017. The IRS has since issued new relief information specific to Puerto Rico (PR-2017-02) and the Virgin Islands (VI-2017-02). As a result, some states have adjusted their tax relief to encompass taxpayers affected by Hurricane Maria.

States following IRS relief and/or participating in waivers of IRP and IFTA requirements include the following:

Connecticut, Hawaii (Harvey, Irma, and Maria), Illinois, Maryland (Harvey and Irma), Minnesota, North Carolina, Oklahoma, Rhode Island,  Tennessee, and Washington are offering tax relief to taxpayers affected by the hurricanes on a case-by-case basis. Arizona, Missouri, Montana, Nevada, New York, and South Dakota have indicated that some type of tax relief may be available for affected taxpayers, according to information compiled by the Council on State Taxation (COST).

Stay up to date with the latest information about available tax relief by visiting the IRS’s Tax Relief in Disaster Situations website or contact the relevant agency for your jurisdiction.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Does the tax relief offered by the federal and state governments afford taxpayers adequate time to file and pay taxes following the recent natural disasters?

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Updated as of Oct. 19, 2017 to include additional guidance.