Certain counties impacted by Hurricane Florence granted relief
On Sept. 15, the IRS published an announcement providing tax relief for regions of North Carolina (IR-2018-187) impacted by Hurricane Florence.
The relief granted by the IRS applies to the North Carolina counties of Beaufort, Bladen, Brunswick, Carteret, Columbus, Craven, Cumberland, Duplin, Harnett, Lenoir, Jones, New Hanover, Onslow, Pamlico, Pender, Robeson, Sampson, and Wayne. The announcement states that while the relief is limited to these particular locations, taxpayers in localities added later will automatically receive the same filing and payment relief. A list of regions included in the relief can be found on the IRS’s Hurricane Florence page.
Like tax relief for other major disasters, these provisions also extend to taxpayers not located within the declared disaster area but whose records necessary to meet a tax filing deadline are located within the impacted declared areas. These taxpayers include workers assisting with the relief efforts who are affiliated with a recognized government or philanthropic organization. All qualifying taxpayers with an address outside of the impacted areas must contact the IRS at 866-562-5227.
Federal tax relief
The tax relief postpones various tax filing and payment deadlines due on or after Sept. 7, 2018 until Jan. 31, 2019. As a result, affected individuals and businesses have until Jan. 31, 2019 to file returns and pay any taxes that were originally due during this period. That includes the Sept. 17, 2018, and Jan. 15, 2019, deadlines for making quarterly estimated tax payments. For individual tax filers, the relief also includes 2017 income tax returns that received a tax-filing extension until Oct. 15, 2018, but not the tax payment, which was due April 17, 2018.
The IRS will waive any late-deposit penalties for federal payroll and excise tax deposits normally due after Sept. 7, 2018, and before Sept. 24, 2018, if the deposits are made by Sept. 24, 2018.
The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.
These declarations also trigger special provisions that give affected taxpayers the option of claiming disaster-related casualty losses on their federal income tax return either in the year the event occurred or in the preceding tax year. While personal casualty losses are no longer deductible beginning with the 2018 tax year as a result of tax reform, personal casualty losses attributable to a federally declared disaster may be claimed as a qualified disaster loss. See Publication 547 for details.
North Carolina tax relief
On Sept. 17, 2018, the North Carolina Department of Revenue issued Important Notice: Tax Relief for Victims of Hurricane Florence in response to Gov. Roy Cooper’s request for federal assistance and President Trump’s subsequent disaster declaration on Sept. 15, 2018 for the counties listed above.
North Carolina law provides that penalties for failure to obtain a license, failure to file a return, and failure to pay tax when due may not be assessed for any period in which the time for filing a federal return or report or for payment of a federal tax is extended under section 7508A of the Internal Revenue Code because of a presidentially declared disaster. Accordingly, the department will waive penalties assessed against any affected taxpayer for the listed late actions occurring on Sept. 7, 2018 through Jan. 31, 2019, if the license obtained, the return is filed, or the tax is paid by Jan. 31, 2019. The notice indicates that this waiver is for “automatic reasons” and not a waiver for good compliance, which is only offered on a limited basis to taxpayers. Additionally, interest will not be waived.
Taxpayers not located in one of the listed counties can request waiver of penalties for any late action occurring within three months following the date of the natural disaster. Taxpayers must provide documentation supporting the claim that Hurricane Florence was the cause of the late action.
North Carolina taxpayers impacted by Hurricane Florence should speak to their tax advisers about filing for penalty waiver and continue to monitor for developments, such as additional counties added to the disaster declaration.