Tax Relief for Victims of Sandy

The IRS released several bulletins this week providing relief for victims of Hurricane Sandy.

IR-2012-83 extends the return filing and tax payment deadline to Feb. 1, 2013 for hurricane  victims in Connecticut (Fairfield, Middlesex, New Haven, and New London Counties; the Mashantucket Pequot Tribal Nation and the Mohegan Tribal Nationa within New London County), New Jersey (Atlantic, Bergen, Cape May, Essex, Hudson, MIddlesex, Monmouth, Ocean, Somerset, and Union) and New York (Bronx, Kings, Nassau, New York, Queens, Richmond, Rockland, Suffolk and Westchester).  The New Jersey relief starts with the Oct. 26 onset of the storm, while the Connecticut and New York relief start Oct. 27.  The release notes that the relief may be extended to taxpayers in other locations “based on additional damage assessments by FEMA. 

The tax relief postpones various tax filing and payment deadlines that occurred starting in late October. As a result, affected individuals and businesses will have until Feb. 1, 2013 to file these returns and pay any taxes due. This includes the fourth quarter individual estimated tax payment, normally due Jan. 15, 2013. It also includes payroll and excise tax returns and accompanying payments for the third and fourth quarters, normally due on Oct. 31, 2012 and Jan. 31, 2013 respectively. It also applies to tax-exempt organizations required to file Form 990 series returns with an original or extended deadline falling during this period. 

Penalties and interest that would otherwise apply will not apply, and taxpayers don’t have to apply for this basic filing extension.  Failure-to-deposit penalties for deposites due when Sandy struck or later are waived if the deposits are made by Nov. 26, 2012. Details on this are available at disaster relief.   

The IRS also noted that it will work with taxpayers who don’t live in the designated areas “but whose books, records or tax professional are located in the areas affected by Hurricane Sandy.”  Those taxpayers do need to contact the IRS to claim the relief.  The number to call is 866-562-5227.

IR-2012-84 alerts employers and others that qualified disaster relief payments made by an employer or other person in respect of damage from Hurricane Sandy (which has been designated a “qualified disaster”) can be excludible from taxable income and that “employer-sp9onsored private foundations may provide disaster relief to employee-victims in areas affected by the hurricane without affecting their tax-exempt status.

Qualified disaster relief payments include amounts to cover necessary personal, family, living or funeral expenses that were not covered by insurance. They also include expenses to repair or rehabilitate personal residences or repair or replace the contents to the extent that they were not covered by insurance.

IR-2012-86  expands availability of housing for victims of Hurricane Sandy by temporarily waiving the low-income housing tax credit rules that prohibit owners of low-income housing from providing housing to Sandy victims who do not qualify as low-income.  Other assistance through FEMA may be available:

Assistance can include grants for temporary housing and home repairs, low-cost loans to cover uninsured property losses, and other programs to help individuals and business owners recover from the effects of the disaster. FEMA has also approved Transitional Sheltering Assistance (TSA) in New York and New Jersey for eligible disaster survivors who have a continuing need for shelter because they are unable to return to their homes for an extended period of time. Individuals and business owners who sustained losses can apply for assistance from FEMA by calling 1-800-621-FEMA (3362) via mobile device at m.fema.gov, or online at http://apps.irs.gov/app/scripts/exit.jsp?dest=http://www.disasterassistance.gov/

More information about the low-income housing credit waiver is available in Notice 2012-68.  General information (with links to these and other releases) is available at “Help for Victims of Hurricane Sandy.”