IRS relief available for flood victims

If your home or business was inundated by this spring’s deluge, dealing with the Internal Revenue Service was probably low on your priority list.

Unfortunately, that may mean you missed the June 16 quarterly estimated tax payment deadline or some other important filing date.

Not to worry. Qualified residents and businesses in five Wisconsin counties are being offered temporary relief from certain federal income tax deadlines, according to Paul Parish, assistant tax director and private tax services industry niche leader for Milwaukee-based Clifton Gunderson, LLP (www.cliftoncpa.com).

Saying that “taxes should be the last thing on the minds of these unfortunate victims,” the IRS has granted disaster relief for individuals and businesses in Crawford, Columbia, Dane, Dodge, Fond du Lac, Grant, Green, Iowa, Juneau, Kenosha, Marquette, Milwaukee, Ozaukee, Racine, Richland, Rock, Sauk, Sheboygan, Vernon, Washington, Waukesha and Winnebago counties. They join disaster relief zones in Iowa, Indiana and seven other states that have experienced severe weather, tornadoes and flooding this spring.

“It’s one less thing for families and business owners to worry about,” said Parish, who lives in Green Bay and serves clients in the area while maintaining an office in Milwaukee. “These relief programs give people some breathing room, so they can take care of more important matters.”

As a result of presidential disaster area declarations, the IRS is postponing until Aug. 13 certain deadlines for income tax return filing, estimated tax payments and certain other time-sensitive acts that would otherwise be due between June 5 and Aug. 13.

The IRS Web site reports that the service will also waive failure to deposit penalties for employment and excise deposits due on or after June 5, and on or before June 20, as long as the deposits were made by June 20.

Parish says taxpayers eligible for the extended filing and payment deadlines include individuals who live in, and businesses whose principal place of business is located in, the covered disaster area. IRS computer systems will automatically identify taxpayers located in these areas and apply automatic filing and payment relief.

Qualified taxpayers will receive additional time to file most tax returns, including individual, corporate and estate and trust income tax returns; partnership returns, S corporation returns and trust returns; estate, gift and generation-skipping transfer tax returns; and employment and certain excise tax returns. Extra time is also being given to make estimated tax payments.

Taxpayers not in the covered disaster area, but whose books, records or tax professionals’ offices are in the covered disaster area, are also entitled to relief, Parish adds.

Disaster relief even extends to workers affiliated with a recognized government or philanthropic organization assisting in relief activities in the covered disaster area.

“This is similar what the IRS did in the aftermath of Hurricane Katrina and other natural disasters before,” says Parish. “They’re stepping up to the plate and providing immediate relief for Wisconsin residents in need.”

Affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request tax relief.

Any taxpayer who might mistakenly receive a penalty notice from the IRS must call the phone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply.

Long-term, Parish says some property owners in the presidential disaster areas who have experienced losses due to the severe weather may have the option of claiming disaster-related casualty losses on their federal income tax return for last year or for 2008.

Subject to limitations, individuals can deduct personal property losses not covered by insurance or other reimbursements. To calculate the deduction, the property owner must first subtract $100 for each casualty event, and 10 percent of adjusted gross income from the total casualty losses. He said waiting to claim the loss on 2008 tax returns may produce the greatest tax savings.

He adds that floods, tornadoes and other natural disasters underscore the need for disaster planning for individuals and businesses.

No one can afford to be without a plan,” he says. “Right now all eyes are on the Midwest, but a similar disruption of business and daily life can happen anywhere. It’s really never too early to prepare for a disaster.”

He suggests storing copies of important personal and business documents in a secure, remote location.

“It’s so much quicker, easier and more accurate to get back to daily living when you have quick access to business and tax records,” says Parish. “Thinking ahead and planning makes all the difference.”

For more on disaster assistance and tax relief, check out the IRS Web site under Disaster Assistance and Emergency Relief for Individuals and Businesses.