Executive summary
The IRS issued tax relief for victims of two separate severe winter storms impacting New York. On Dec. 2, 2022, the IRS announced filing and payment deadlines beginning on or after Nov. 18, 2022, and before March 15, 2023, are postponed to March 15, 2023, for certain listed counties. On Dec. 29, 2022, the IRS announced filing and payment deadlines beginning on or after Dec. 23, 2023, and before April 18, 2023, are postponed to April 18, 2023. Both announcements include estimated tax payments due Jan. 17, 2023, and quarterly payroll and excise taxes normally due on Jan. 31, 2023. The guidance also provides for special treatment of gain/loss recognition for taxpayers experiencing casualty loss.
Detailed analysis
Extended due date – filing and payment relief
The IRS issued guidance on Dec. 2, 2022 granting relief to taxpayers affected by a severe winter storm and snowstorm in New York. Affected taxpayers will now have until March 15, 2023, to file various individual and business tax returns and to make tax payments. The relief includes individuals and households that reside or have a business in the following New York counties: Cattaraugus, Chautauqua, Erie, Genesee, Jefferson, Lewis, Niagara, Oneida, Oswego, St. Lawrence and Wyoming.
The relief postpones various tax filing and payment deadlines that occur on or after Nov. 18, 2022, and before March 15, 2023. Affected taxpayers will now have until March 15, 2023, to file returns and pay taxes that were originally due during this period. The March 15, 2023 deadline also applies to the quarterly estimated tax payments normally due on Jan. 17, 2023, and to the quarterly payroll and excise tax returns normally due on Jan. 31, 2023. Penalties on payroll and excise tax deposits due on or after Nov. 18, 2022, and before Dec. 5, 2022, will be abated as long as the tax deposits were made by Dec. 5. 2022.
The IRS relief includes other time-sensitive actions described in Reg. section 301.7508A-1(c)(1) and Rev. Proc. 2018-58; filing Form 5500 series returns due on or after Nov. 18, 2022 and before March 15, 2023; and transferors who are not affected taxpayers but who are involved in a section 1031 like-kind exchange pursuant to section 17.02(2) of Rev. Proc. 2018-58.
The IRS also issued guidance on Dec. 29, 2022, granting relief to taxpayers affected by another server winter storm in New York. Affected taxpayers will now have until April 2023, to file various individual and business tax returns and to make tax payments. The relief includes individuals and households that reside or have a business in the following New York counties: Erie and Genesee. Note that these two counties were also included in the Dec. 2, 2023 guidance and therefore only these two counties have additional relief at the present time.
The relief postpones various tax filing and payment deadlines that occur on or after Dec. 23, 2022, and before April 18, 2023. Affected taxpayers will now have until April 18, 2023, to file returns and pay taxes that were originally due during this period. The April 18, 2023 deadline also applies to the quarterly estimated tax payments normally due on Jan. 17, 2023, and to the quarterly payroll and excise tax returns normally due on Jan. 31, 2023. Penalties on payroll and excise tax deposits due on or after Dec. 23, 2022, and before Jan. 9, 2023, will be abated as long as the tax deposits were made by Jan. 9, 2023.
The IRS relief includes other time-sensitive actions described in Reg. section 301.7508A-1(c)(1) and Rev. Proc. 2018-58; filing Form 5500 series returns due on or after Dec. 23, 2022, and before April 18, 2023; and transferors who are not affected taxpayers but who are involved in a section 1031 like-kind exchange pursuant to section 17.02(2) of Rev. Proc. 2018-58.
Disaster-related casualty losses
In addition to extensions of time to file tax returns and complete certain actions, presidential disaster declarations offer taxpayers special options with respect to gain/loss recognition. Taxpayers who experience a casualty loss in a presidentially-declared disaster area may qualify to recognize losses in the year prior to the year the casualty actually occurred under section 165(i). Taxpayers who realize gains by receiving insurance proceeds in excess of basis may be able to defer gain recognition by reinvesting in qualified property under section 1033. Some of these actions are time sensitive, so taxpayers are encouraged to contact their tax advisor to take advantage of the full range of relief options. Taxpayers that will claim a disaster loss should put the Disaster Designation in bold letters at the top of their return and include the FEMA disaster declaration number FEMA-35890-EM (Dec. 2, 2022 announcement) or FEMA-3590-EM (Dec. 29, 2022 announcement) on the return.
Please see the applicable news release and refer to Publication 547 and Instructions to Form 4684 Casualties and Thefts for instructions.
Automatic penalty relief
The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. 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 IRS should be contacted to have the penalty abated.
Relief for those impacted outside the disaster area
The IRS will also work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.
