IRS Offers Tax Relief to Hurricane Victims in Several States

Internal Revenue Service (IRS) building in Washington on June 28, 2023. (Madalina Vasiliu/The Epoch Times)

The Internal Revenue Service (IRS) has announced a tax relief package for individuals and businesses in Maine and Massachusetts who are grappling with the aftermath of Hurricane Lee.

Taxpayers residing or operating businesses in all 16 counties in Maine and all 14 counties in Massachusetts now have until Feb. 15, 2024, to file various federal individual and business tax returns, and make tax payments, the IRS said in a statement.

The relief is being granted following a disaster declaration issued by the Federal Emergency Management Agency (FEMA) for Maine and Massachusetts, where Hurricane Lee brought destructive winds and bands of heavy rain.

The tax relief measures postpone various tax filing and payment deadlines that occur between Sept. 15 and Feb. 15 next year.

Various Deadlines Extended

Those who were affected by Hurricane Lee in Maine and Massachusetts who had a valid extension to file their 2022 returns (initially due to run out on Oct. 16) will now have until Feb. 15, 2024, to file their returns.

This extension applies to filing only and not to tax payments, as tax payments related to these 2022 returns were originally due on April 18 this year.

Quarterly estimated income tax payments normally due on Sept. 15, 2023, and Jan. 16, 2024, have been extended by the IRS’s action to Feb. 15, 2024.

Also, quarterly payroll and excise tax returns typically due on Oct. 31, 2023, and Jan. 31, 2024, have also been granted an extension, with the new deadline set for Feb. 15, 2024.

Several business entities will benefit from this relief, including calendar-year partnerships and S corporations whose 2022 extensions ran out on Sept. 15, as well as calendar-year corporations whose 2022 extensions run out on Oct. 16. Additionally, calendar-year tax-exempt organizations whose extensions run out on Nov. 15, will also have until Feb. 15, 2024, to file their returns.

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Penalties for the failure to make payroll and excise tax deposits due on or after Sept. 15 and before Oct. 2 will be abated, provided the deposits are made by Oct. 2.

Affected taxpayers located within the disaster area will receive automatic filing and penalty relief and are not required to contact the IRS separately.

In unique circumstances where an affected taxpayer does not have an IRS address of record located in the disaster area, they could receive late filing or late payment penalty notices from the IRS. In such cases, taxpayers should call the number on the notice to have the penalty abated.

Taxpayers living outside the disaster area but who have records necessary to meet a deadline during the postponement period located in the affected area are also eligible for relief. Such individuals should contact the IRS directly for clarification regarding their filing circumstances, the tax agency said.

More Tax Relief Measures

The IRS also said in its Sept. 25 notice that individuals in federally declared disaster areas who suffered uninsured or unreimbursed disaster-related losses can choose to claim these losses on either the return for the year the loss occurred (2023), or the return for the prior year (2022).

Taxpayers have up to six months after the due date of their federal income tax return for the disaster year to make this selection.

In general, disaster relief payments are excluded from gross income. This means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living, or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents.

Also, additional relief may be available to affected taxpayers who participate in retirement plans or individual retirement arrangements (IRAs). This includes special disaster distributions that are not subject to the additional 10 percent early distribution tax and the option to make hardship withdrawals. Specific rules and guidance for these options can be found in each plan or IRA.

IRS to Keep Operating Even If Government Shuts Down

Political deadlock on Capitol Hill around the appropriations process could lead to a government shutdown at the end of September.

But even if the government shuts down, the IRS will most likely continue to work, and tax enforcers will keep collecting their paychecks, according to an official.

Doreen Greenwald, president of the National Treasury Employees Union (NTEU), said during a press call on Sept. 18 that the IRS would probably use funds from the Inflation Reduction Act to remain fully operational in case of a shutdown and continue to operate without interruption.

Ms. Greenwald added that the NTEU is still waiting for a final plan from the Treasury Department, while adding that she hopes lawmakers will strike a deal to avert a shutdown.

Last year’s $1.7 trillion omnibus funding bill is keeping the government running until the end of fiscal year 2023 on Sept. 30.

The massive bill, which totaled more than 4,000 pages, followed three smaller stopgap measures that kept the government operating until congressional leaders negotiated the final, bigger package.

Now, Congress faces an appropriations battle and must approve a bevy of major spending bills by Sept. 30.

If House and Senate members fail to agree on any of the 11 bills, the government would technically be forced to shut down.

Contentious issues like illegal immigration, securing the southern border, and funding for Ukraine are still on the table as lawmakers try to hammer out a compromise.