Partners indirectly affected by disasters may qualify for relief
TAX ALERT |
In the wake of two recent major hurricanes, taxpayers that were directly affected – such as those located in or residing in a declared federal ‘disaster area’ – were provided with a postponed deadline of Jan. 31, 2018 for tax filings and payments. In addition, these extended deadlines may also apply to taxpayers located outside of the covered areas, if they are indirectly affected because of a need for tax information from an investment in a business located in a covered area.
If a partnership or S corporation that is located in a covered disaster area is unable to provide the information necessary for its investors to file their returns – such as Schedule K-1 information from a partnership or S corporation provided to an individual partner or shareholder to prepare his or her Form 1040 – then the investors will also be considered ‘affected taxpayers’ and thus may qualify for relief.
It is important to note, however, that unlike those taxpayers physically located within a covered disaster area – such as the entity itself if it is located in a covered area – affected taxpayers located outside the covered areas – such as the investors who need K-1 information from the entity located in the disaster area – will not be afforded automatic tax relief. The investors must call the IRS disaster hotline at 866-562-5227 in order to request postponement of filing or payment.
For additional pertinent information in regard to Hurricane Irma disaster relief, please see our tax alert: IRS announces tax relief related to Hurricane Irma