Practice and Procedure: Tax Relief Available for Taxpayers Affected by Hurricane Florence

Over the weekend, the IRS released IR-2018-187, outlining federal tax relief available to both individual and business taxpayers affected by the devastating impact of Hurricane Florence. In addition to federal assistance, states are offering relief for taxpayers affected by the natural disaster.

Federal Tax Relief Available to Victims of Hurricane Florence

IR-2018-187 notably extends the deadline for qualified taxpayers that file certain federal tax returns and make specific tax payments to Jan. 31, 2019. The IRS provides that the deadline extension applies to filing and payment due dates beginning on or after Sept. 7, 2018. The extension also covers the following situations:

  • Taxpayers with valid extensions ending Sept. 17, 2018, or Oct. 15, 2018;
  • Quarterly estimated income tax payments due Sept. 17, 2018; and
  • Quarterly payroll and excise tax returns due Oct. 31, 2018.

Payroll and excise tax deposit penalties due on or after Sept. 7, 2018, will be waived through Sept. 24, 2018—so as long as the deposits are made by Sept. 24, 2018.

Qualified taxpayers will receive the federal filing and penalty relief automatically, so there is no need to contact the IRS to request this relief. To qualify for the automatic relief, taxpayers must have an address of record located within a disaster area qualifying for individual assistance as determined by the Federal Emergency Management Agency (FEMA). Currently FEMA has only approved assistance for disaster areas in North Carolina which include the counties of Beaufort, Bladen, Brunswick, Carteret, Columbus, Craven, Cumberland, Duplin, Harnett, Jones, Lenoir, New Hanover, Onslow, Pamlico, Pender, Robeson, Sampson, and Wayne. According to IR-2018-187, potential additions to this list, including localities in other states, will be eligible for the same federal relief.

Taxpayers residing outside a disaster area but who have records necessary to meet a tax deadline that are located within a disaster area should contact the IRS for assistance.

Workers assisting in relief efforts in the disaster counties, who are affiliated with a recognized government or philanthropic organization, will also be eligible for the federal tax relief.

North Carolina Tax Relief Available to Victims of Hurricane Florence

North Carolina’s department of revenue announced that it will be providing tax relief similar to that offered by the IRS for taxpayers residing in FEMA-designated counties who have a business within those counties, or whose necessary records are located within those counties.

The department will waive penalties for tax delinquencies related to obtaining a license, filing a return, or payment of tax occurring on or after Sept. 7, 2018, through Jan. 31, 2019, as long as the activities are resolved by Jan. 31, 2019. The penalty waiver for failure to file or failure to pay applies to all quarterly, monthly, and semiweekly filers that file withholding returns and pay the tax due by Jan. 31, 2019.

This waiver is not available to taxpayers subject to an average withholding tax of $20,000 per month and who must file electronically. Instead, these taxpayers must continue to comply with the filing requirement and have until Sept. 24, 2018, to pay any tax due on or after Sept. 7, 2018.

Taxpayers unable to timely file or pay taxes because of Hurricane Florence who are not located in a disaster county can request a waiver of any penalties assessed. Penalty waiver requests must be made within three months of the natural disaster and supporting documentation must be provided.

Other State Tax Relief Available to Victims of Hurricane Florence   

Alabama, Arkansas, Georgia, and Pennsylvania have also issued guidance on tax relief available to qualifying victims of Hurricane Florence.

The Pennsylvania Department of Revenue announced that it would generally follow the IRS guidance. In particular, the department created a schedule of extension due dates for affected taxpayers filing Pennsylvania Form RCT-101, Corporate Tax Report; and Pennsylvania Form PA-20S/PA-65, S corporation/Partnership Information Return.

Alabama, Arkansas, and Georgia are offering a temporary waiver of requirements related to the International Registration Plan (IRP) and International Fuel Tax Agreement (IFTA) for any motor vehicles traveling through their states while engaging in interstate disaster relief efforts. The temporary IRP and IFTA requirement waivers will be in effect as follows:

  • Alabama - Sept. 11, 2018 through Oct. 12, 2018;
  • Arkansas - Sept. 12, 2018 through Oct. 31, 2018; and
  • Georgia - Sept. 13, 2018 through Oct. 8, 2018, or until hurricane relief efforts are completed.

Other states are likely to follow in issuing tax relief for taxpayers affected by Hurricane Florence. Current federal tax relief can be found on the IRS Tax Relief in Disaster Situations website or by contacting the relevant agency in your jurisdiction. Also, the National Hurricane Center (NHC) website has the latest updates on Florence.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: Is the tax relief offered by the federal and state governments enough to ease the burden of those affected by Hurricane Florence? Why or why not?

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