There are literally thousands of displaced Americans now residing in the St. Louis region that lost their homes to hurricanes Katrina and Rita.
The Internal Revenue Service recently announced that taxpayers affected by the hurricane might be eligible for relief. Deadlines for affected taxpayers to file returns, pay taxes and perform other time-sensitive acts have been postponed to Feb. 28, 2006.
In the hardest-hit areas of Texas and Louisiana, the tax relief will be automatic, and taxpayers won’t need to do anything to get the extensions and other relief available.
In Texas, nine counties qualify for automatic tax relief: Chambers, Galveston, Hardin, Jasper, Jefferson, Liberty, Newton, Orange and Tyler.
In Louisiana, 23 parishes qualify for automatic tax relief: Acadia, Allen, Ascension, Beauregard, Calcasieu, Cameron, Evangeline, Iberia, Jefferson, Jefferson Davis, Lafayette, Lafourche, Livingston, Plaquemines, Sabine, St. Landry, St. Martin, St. Mary, St. Tammany, Terrebonne, Vermilion, Vernon and West Baton Rouge.
In other areas of Texas and Louisiana (outside of the nine counties and 21 parishes listed above), affected taxpayers are eligible for relief, but will need to self-identify. Taxpayers outside of Texas and Louisiana, whose books, records or tax professionals are located in the impacted areas, also will need to identify themselves to the IRS as hurricane victims.
The IRS encourages all victims of this hurricane to identify themselves by writing “Hurricane Rita” or “Hurricane Katrina” in red ink at the top of their tax forms or any other documents filed with the IRS. Taxpayers who need to alert the IRS or have other hurricane-related questions can also call the special IRS disaster hotline at 1-866-562-5227.
The IRS has postponed deadlines — and will abate interest and any late filing, late payment or failure to deposit penalties that would otherwise apply — for any tax return, tax payment or tax deposit with an original or extended due date falling on or after Sept. 23, 2005. This relief includes the Oct. 17 deadline for individuals who received a second extension for filing their individual income tax returns; the Oct. 31 deadline for filing quarterly federal employment and excise tax returns; and employment and excise deposits due on or before Feb. 28, 2006. In addition, any affected taxpayer who receives a penalty notice from the IRS should call the number on the notice to receive penalty abatement.
The IRS will provide relief from compliance activities until Feb. 28, 2006, in the hardest-hit areas, specifically those counties and parishes listed above Compliance activities for taxpayers outside the hardest-hit areas will be suspended if those taxpayers identify themselves as affected by the disaster. Taxpayers with questions in these areas can contact the IRS.
Covered Disaster Area
All counties and parishes in Texas and Louisiana constitute a covered disaster area for tax purposes and are entitled to the relief.
Affected Taxpayers
Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes, and perform other time-sensitive acts include individuals who live, and businesses whose principal place of business is located, in the covered disaster area.
Taxpayers not in the covered disaster area, but whose books, records, or tax professionals are in the covered disaster area, are also entitled to relief. In addition, all workers assisting in the relief activities in the covered disaster area are eligible for relief whether or not they are affiliated with a recognized government or philanthropic organization. Finally, any individuals visiting the covered disaster area that were killed or injured as a result of the hurricane are also entitled to relief.
This extension to file and pay does not apply to information returns in the W-2, 1098, 1099 or 5498 series, to Forms 1042-S or 8027, or to employment and excise tax deposits due on or before Feb. 28, 2006. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. The IRS will abate penalties for affected taxpayers for failure to make timely deposits, provided they make these deposits by Feb. 28, 2006.
The IRS assures individuals, businesses and tax practitioners that it will continue monitoring the aftermath of Hurricane Rita and resolve other potential tax administration issues as they arise.