Tax Relief Provisions for Disaster Losses

• Published date: 01 January 2018
• Date: 01 January 2018
• Author: Shirley Dennis‐Escoffier
• DOI: http://doi.org/10.1002/jcaf.22318

167

© 2018 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI 10.1002/jcaf.22318

D

e

p

a

r

t

m

e

n

t

s

IRS

Tax Relief Provisions for

Disaster Losses

Shirley Dennis-Escoffier

Weather-related casualty losses

have been on the increase with

Hurricanes Harvey, Irma, and

Maria recently leaving a trail

of destruction. Businesses

and their employees can take

advantage of the tax rules to

somewhat mitigate their losses.

This column looks at the tax

treatment of various options

for providing disaster assis-

tance to employees as well as

the casualty loss rules for busi-

nesses and their employees and

concludes with a summary of

the Disaster Tax Relief Act

passed by Congress on Septem-

ber 28, 2017.

IDENTIFYING A QUALIFIED

DISASTER AREA

Special relief provi-

sions apply when a casualty

loss occurs in an area that is

declared a disaster area by the

president of the United States.

Areas qualifying for disaster

assistance (including those

affected by Hurricanes Harvey,

Irma, and Maria) are identi-

fied by the Internal Revenue

Service (IRS) based on deter-

minations made by the Federal

Emergency Management

Agency (FEMA); the FEMA

website lists affected areas by

county (https://www.fema.gov/

disasters). The IRS publishes

news releases on its website

regarding the specific relief

provisions that are available for

each disaster area (https://www

.irs.gov/newsroom/tax-relief-in-

disaster-situations).

FILING DEADLINES EXTENDED

The IRS has issued sev-

eral notices informing affected

taxpayers of special relief

including extended deadlines

for filing tax returns. Affected

taxpayers include any business

entity whose principal place

of business and any individual

whose principal residence is

located in a county designated

as a disaster area. It also

includes any individual who is a

relief worker assisting in a cov-

ered disaster area and taxpay-

ers whose tax records necessary

to meet a filing or payment

deadline are maintained in a

covered disaster area.

Affected businesses and

individuals have until January

31, 2018, to file returns and pay

any taxes that were originally

due during the covered period.

The covered period began

August 23, 2017, for Hurricane

Harvey; September 4, 2017,

for Hurricane Irma; and Sep-

tember 15, 2017, for Hurricane

Maria. This relief includes an

additional filing extension for

businesses with valid exten-

sions that were due to expire

on September 15, 2017, and an

extension of the deadline for

making quarterly estimated tax

payments with a September 15,

2017, deadline and January 16,

2018, deadline, as well as relief

for the October 31 deadline for

quarterly payroll tax returns.

For individuals, the relief

applies for 2016 income tax

returns that received an exten-

sion until October 16, 2017;

however, the tax payments

related to these 2016 returns

were originally due on April 18,

2017, and so these payments

are not eligible for relief. If

an affected taxpayer receives

a late filing or late payment

penalty notice from the IRS

that had original or extended

filing, payment or deposit due