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An Overview of Tax Relief Opportunities for Hurricane Victims

by karin on November 28, 2017

For those who have lost a significant amount of property due to the destruction caused by Hurricanes Irma and Maria, there is some good news. The Internal Revenue Service (IRS) offers tax relief to victims of these major storms.

The agency recently outlined these relief opportunities, making them available to victims of the hurricanes that have battered the United States. As part of this relief effort, typical tax deadlines are postponed for individuals and businesses until January 31, 2018 to file any returns and pay due taxes.

Eligible individuals and businesses include the following:

  • Individual tax filers whose extension previously ran out on October 16, 2017. Because payments for these 2016 returns were originally due on April 18, 2017, those payments are not eligible for relief.
  • Business filers, including calendar-year partnerships, whose extensions expired on September 15, 2017.
  • Quarterly estimated tax payments that were scheduled to be due on September 15, 2017 and January 16, 2018.
  • Quarterly excise and payroll tax returns due on October 31, 2017.
  • Calendar-year tax-exempt organizations whose 2016 extensions expired on November 15, 2017.

There are a variety of other tax returns, payments and tax-related actions that qualify for extensions as part of these relief opportunities. The IRS’s disaster relief page has more information.

Special assistance for qualified taxpayers

In addition to extensions for filing and paying taxes, the IRS offers other forms of special assistance to taxpayers in disaster areas. This includes the following:

  • Employer-sponsored, leave-based donation programs allow employees to forgo vacation, sick or personal leave in exchange for tax payments made by their employer before January 1, 2019 to various charities providing hurricane relief. Donated leave is not included in an employee’s income, and the donations are tax deductible as a business expense for employers.
  • 401(k)s and other types of employer-sponsored retirement plans can offer loans and hardship distributions to hurricane victims and their families. Victims may take a hardship distribution or borrow up to the statutory limit from the retirement plan. A person who lives outside the disaster area may take out a loan or hardship distribution to be used for a child, parent, grandparent or dependent who was a victim in the disaster area.
  • The IRS is currently waiving late-deposit penalties for payroll and excise taxes that would typically be due within the first 15 days of a disaster period.
  • Individuals and businesses who sustained uninsured or unreimbursed disaster-related losses may claim those losses on either the return of the year the loss occurred or the return of the prior year.
  • The IRS is waiving fees and expediting requests for copies of previously filed returns for disaster-area taxpayers. This is helpful for anyone who has lost their documents or whose documents were damaged in the storms.

To learn more about the various relief opportunities the IRS is providing to taxpayers in the wake of the recent hurricanes, contact an attorney in the U.S. Virgin Islands.

Ravinder S. Nagi is Assistant Managing Attorney and Chair of the Labor & Employment Practice Group at BoltNagi, an employment and labor law firm serving business and organizations throughout the U.S. Virgin Islands.

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