IRS Updates Hurricane Katrina Tax Relief Guidelines

WASHINGTON -- the Internal Revenue Service announced Wednesday additional details to help ensure that those impacted by Hurricane Katrina get the tax relief to which they are entitled. Notice 2005-73, also released Wednesday, has full details regarding the relief.

Taxpayers affected by the hurricane may be eligible for tax relief, regardless of where they live. Deadlines for affected taxpayers to file any returns, pay any taxes and perform other time-sensitive acts have been postponed to Jan. 3, 2006.

In the hardest-hit areas -- those designated by FEMA as “individual assistance areas” -- the tax relief will be automatic, and taxpayers won’t need to do anything to get the extensions and other relief available. In areas where FEMA has determined damage is more isolated -- designated as “public assistance areas” -- or for other taxpayers outside the impacted area, people will need to identify themselves as hurricane victims when filing with the IRS.

The IRS will also work with any taxpayer who resides elsewhere but whose books, records or tax professional are located in the areas affected by Hurricane Katrina.

To help identify as many affected taxpayers as possible, the IRS encourages all taxpayers affected by Hurricane Katrina to write “Hurricane Katrina” in red ink at the top of their forms or any other documents filed with the IRS. Taxpayers who need to alert the IRS or have other Katrina-related questions can also call the special IRS disaster hotline at 1 (866) 562-5227.

The IRS will abate interest and any late filing, late payment or failure to deposit penalties that would otherwise apply. This relief includes the Sept. 15 due date for estimated taxes and for calendar-year corporate returns with automatic extensions; the Oct. 17 deadline for individuals who received a second extension for filing their individual income tax returns; the Oct. 31 deadline for filing quarterly federal employment and excise tax returns; and employment and excise deposits due on or before Jan. 3, 2006. In addition, any disaster-area taxpayer who receives a penalty notice from the IRS should call the number on the notice to receive penalty abatement.

The postponement of deadlines, interest suspension and waiver of penalties apply to any tax return, tax payment or tax deposit with an original or extended due date falling on or after Aug. 29, 2005. In Florida, where Katrina hit first, the date is on or after Aug. 24, 2005.

Where taxpayers live can affect whether they need to identify themselves as Katrina victims when filing with the IRS. For the hardest-hit counties and parishes -- those disaster areas designated by FEMA as qualifying for “individual assistance” -- taxpayers with addresses in those areas do not need to contact the IRS to get the extensions and other relief available. In areas where damage is less widespread -- the FEMA disaster areas qualifying for “public assistance” -- taxpayers should identify themselves as hurricane victims when filing forms and responding to IRS notices and contacts to ensure that they receive the relief to which they are entitled.

Click here to read the full press release.

-- NYSSCPA.org News Staff

Posted on 9/22/05