Moving Forward From Recent Natural Disasters
It has been a prolific year for Mother Nature and 2017 will be forever remembered as one of the most devastating years on record with regards to damage from natural disasters. The month of September alone felt a historic wrath which included multiple category 5 hurricane touchdowns on U.S. soil, two 7+ magnitude earthquakes in Mexico, and vast wildfires consuming over 1,000,000 acres in the west and northwest. Although many may have escaped without tragedy or devastation, others were not so lucky.
As a result of the devastation caused by Hurricanes Harvey and Irma, the Internal Revenue Service (“IRS”) has announced tax relief for the victims affected by the hurricanes. The IRS has designated a number of areas in Texas, Florida, the U.S. Virgin Islands and Puerto Rico as federal disaster areas qualifying for assistance, which may affect businesses and organizations located in those states.
Relief for Areas Affected by Harvey
“Affected” taxpayers[1] generally have until the “extended date” to file most tax returns including individual, C corporation, S corporation, partnership, estate, and trust tax returns, among others.[2]
For the following Texas counties, the extended filing date is January 31, 2018:
Aransas, Austin, Batrop, Bee, Brazoria, Calhoun, Chambers, Colorado, DeWitt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Hardin, Harris, Jackson, Jasper, Jefferson, Karnes, Kleberg, Lavaca, Lee, Liberty, Matagorda, Montgomery, Newton, Nueces, Orange, Polk, Refugio, Sabine, San Jacinto, San Patricio, Tyler, Victoria, Walker, Wharton, and Waller counties.
For the above Texas counties, the extended filing date is applicable to:
- Individuals who have returns on valid extensions due October 16, 2017, and businesses whose returns are on valid extensions and are due September 15, 2017.
- Quarterly estimated tax payments that were due September 15, 2017 and January 16, 2018;
- Quarterly payroll and excise tax returns that were due October 31, 2017; and
- Exempt organizations with an original or extended filing deadline falling within the postponement period.
Relief Expected for Irma Sufferers
Similarly, victims of Hurricane Irma in Florida and certain areas of Puerto Rico and the U.S. Virgin Islands that are designated as federal disaster areas have been given an extended filing deadline of January 31, 2018. Special tax relief and assistance is available to taxpayers in the Presidential Disaster Areas. The IRS filing and payment relief applies to the following localities identified by FEMA for Individual Assistance due to Hurricane Irma:
- In U.S. Virgin Islands: The islands of St. John and St. Thomas.
- In Puerto Rico: The municipalities of Culebra and Vieques.
- In Florida: The IRS has expanded relief to areas in the state that is designated by FEMA as qualifying for individual or public assistance. This includes those who reside or have a business in all 67 counties.
[1] “Affected” taxpayer (defined by Treasury Regulation 301.7508A-1(d)(1)) includes, among other things: any individual whose principal residence, and any business entity whose principal place of business, is located in the counties designated as disaster areas; an individual who is a relief worker assisting in a covered disaster area; and taxpayers who live outside the disaster area but who kept records within the affected areas, which were needed to meet a deadline occurring within the postponement period.
[2] The postponement of time to file and pay does not apply to information returns, such as Forms W-2, 1098, 1099, 5498, 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Further, the postponement does not apply to employment and excise tax deposits. But penalties for failure to make timely employment and excise deposits can be abated in certain cases.
Are You Prepared For The Next Disaster?
During this time of reflection, it is important to remember steps that can be taken to help mitigate losses from these events. Some basic steps that can be taken include:
- Create a disaster plan with specific instructions for possible outcomes (e.g. power loss, flooding, incapacitation, shelters, etc.)
- Establish expectations to include specific roles for coworkers and family members. Practice these roles periodically.
- Perform risk assessments to identify where mitigating efforts can be performed (e.g review insurance coverage, test locking mechanisms, board-up windows, etc.).
- Utilize technology for document storage, communication, power generation, etc.
In the aftermath of these disasters, there are several links that may be useful in aiding recovery.
The Federal Emergency Management Agency (FEMA) has set up links for Hurricane Harvey, Irma, and Maria victims. Here you can find up-to-date information on the storm, information about returning home and cleanup as well as other useful tips. The links are listed below.
FEMA has also established some designated links to help with area risk assessment and preparedness for earthquakes and wildfires:
FEMA: Earthquake Safety Checklist
For other disaster recovery information from FEMA or to search for an event, you can search www.fema.gov/disasters for a list. Also, if you are inclined to donate to a cause in support of victims of natural disasters and/or recovery efforts, make sure you research the charity and ensure they are reputable and that relief efforts are effective. A useful website for this research and links to organizations providing disaster relief in addition to charity ratings is www.charitynavigator.org.
WithumSmith+Brown, PC (Withum) provides clients in timeshare, whole and fractional ownership associations and other industries with assurance, accounting, tax compliance and consulting services. For further information about Withum and the services they provide to the industry, contact Lena Combs ([email protected]) at (407) 849-1569 or www.withum.com.
