FOR IMMEDIATE RELEASE: UPDATED SEPTEMBER 1, 2011

IRS PROVIDES TAX RELIEF TO VICTIMS OF HURRICANE IRENE

IR-2011-87

WASHINGTON -- The Internal Revenue Service is providing tax relief to individual and business taxpayers impacted by Hurricane Irene.

The IRS announced today that certain taxpayers in North Carolina, New Jersey, New York and Puerto Rico will receive tax relief, and other locations are expected to be added in coming days following additional damage assessments by the Federal Emergency Management Agency (FEMA).

The tax relief postpones certain tax filing and payment deadlines to Oct. 31, 2011. It includes corporations and businesses that previously obtained an extension until Sept. 15, 2011, to file their 2010 returns and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter of 2011, which would normally be due Sept. 15.

Full details, including the start date for the relief in various locations and information on how to claim a disaster loss by amending a prior-year tax return, can be found in tax relief announcements for individual states at www.IRS.gov.

The tax relief is part of a coordinated federal response to the damage caused by the hurricane and is based on local damage assessments by FEMA. For information on disaster recovery, individuals should visit disasterassistance.gov.

TAX RELIEF AVAILABLE SO FAR FOR IRENE VICTIMS

Filing and payment relief is currently available to taxpayers in federal disaster areas declared in North Carolina, New Jersey, New York State and Puerto Rico. The IRS expects to announce tax relief for taxpayers in other areas as damage assessments continue. The IRS encourages taxpayers and tax practitioners to monitor Tax Relief in Disaster Situations on this website for updates.

So far, IRS filing and payment relief applies to the following counties and municipalities:

In North Carolina: Beaufort, Carteret, Craven, Dare, Hyde, Pamlico and Tyrell;

In New Jersey: Bergen, Essex, Morris, Passaic and Somerset;

In New York: Albany, Delaware, Dutchess, Essex, Greene, Schenectady, Schoharie and Ulster; and

In Puerto Rico: Caguas, Canovanas, Carolina, Cayey, Loiza, Luquillo and San Juan.

WHAT TO DO IF YOU NEED FINANCIAL HELP AFTER A DISASTER

Special tax law provisions may help you recover financially from the impact of a federally declared disaster. If you have damaged or lost property in a location declared by the federal government as a major disaster area, you may be able to get some money back from the IRS right now.

Additionally, depending on your circumstances, the IRS may grant you more time to file your return and pay your taxes. You can get a faster refund by claiming losses related to the disaster on your tax return for the previous year, usually by filing an amended return.

You can learn more by reviewing Tax Relief in Disaster Situations .

IRS TAX HELP FOR VICTIMS OF HURRICANES KATRINA AND RITA

The IRS is offering many opportunities to help victims of Hurricanes Katrina and Rita. The information in this article summarizes some of the assistance the IRS offers Katrina and/or Rita victims and those who wish to help them.

The IRS has a special disaster hotline at 1-866-562-5227 for all victims of the hurricanes. This number will have all the up-to-date information regarding what the IRS can do to assist you with your individual questions. Since information is being updated regularly, it is a good idea to find out what the latest information is.

Taxpayers don't need to live in the affected areas, but need to establish the hurricane affected them in order to qualify for the tax relief. The special disaster hotline can help you determine if you qualify for this tax relief. If you are a relief worker assisting in the recovery or have your books, records or tax professional located in the affected areas, you also may qualify.

In general, you can postpone filing returns and paying taxes until January 3, 2006 for due dates falling on or after August 29, 2005. For Florida the due date is on or after August 24, 2005 since Katrina hit there first. This would include corporate and individual returns with proper extensions, federal employment and excise returns and their respective deposits due on or before February 28, 2006.

If you are affected by an "individual assistance area" as designated by FEMA, the tax relief is automatic. If you are in a "public assistance area" as designated by FEMA or other impacted area, you will need to identify yourself as a hurricane victim with the IRS.

You can have your interest and penalties abated for payments due for this time period. Of course, any tax owed is still due but payment can be delayed without interest and penalties accumulating during this time period.

Money from retirement plans such as 401(k), 403(b) and certain 457 deferred-compensation plans may also be utilized in the form of a loan or hardship distribution. You should discuss the options available with your plan administrator and tax preparer to ensure that you don't get penalized. Individual Retirement Account (IRA) participants cannot get a loan from their IRA but they may be able to take hardship distributions. Hardship withdrawals must be made by March 31, 2006. Be aware you will owe taxes on the amount withdrawn. Congress is considering a modification to the 10% early-withdrawal penalty so make sure the transaction is handled properly to avoid any penalty. This retirement plan relief can be utilized to repair or replace a home or for other necessities. You can use it to assist certain relatives and dependents including parents, grandparents and children. You can find out more regarding tax favored treatment of early withdrawals at the irs.gov website at IR-2005-122 dated October 17, 2005 .

For individuals and corporations who want to help victims, it is relatively easy for employers to adopt a Leave Donation Program where employees can donate their unused vacation, sick or personal leave. The amount is calculated based on the hours donated and the hourly rate of the employee. This is converted to a cash payment to the respective charities as set up by the corporation and may even include religious and educational organizations as well as local, state and federal governments. The donated time is not taxable to the employee and is tax deductible to the corporation. The payments need to be made by December 31, 2006. If you don't have accrued time this year, you can wait until you have accrued time and donate it as long as it is before the end of 2006. Employers can find the basic requirements in Notice 2005-68 at the irs.gov website.

The IRS is also allowing more liberal rules for casualty or theft losses. Certain loss limitations have been removed. You can find out more information about it at the irs.gov website at IR-2005-119 dated October 11, 2005 .

This article was intended to provide general information about IRS help for hurricane victims. It does not contain all the information available. If you have further questions, I can be reached at www.dgoodmancpa.com.

About the Author

Dianne Goodman, CPA, FCPA - Specializes in servicing Small Businesses and Individuals. Visit www.dgoodmancpa.com for relevant and current information on a variety of financial and tax issues focusing on small businesses and individuals or call at 1-888-851-1975.

CONTACT INFORMATION:

Dianne Goodman, CPA, FCPA
Comprehensive Small Business Solutions, PC
505 323-2307
1 888-851-1975 toll free
www.dgoodmancpa.com