IRS Gives Tax Relief to Victims of California Wildfires

After the recent destruction caused by the California Wildfires, the IRS announced today that individuals and businesses have until January 31, 2018 to file certain individual and business tax returns and make certain tax payments.

This includes an additional filing extension for taxpayers with valid tax extensions that run out this coming Monday, October 16.

The tax relief postpones various tax filing and payment deadlines that occurred starting on October 8, 2017. As a result, affected individuals and businesses will have until January 31, 2018, to file tax returns and pay any taxes originally due during this period. This includes:

• 2016 Extended Individual Tax Returns:  An additional filing extension is granted to individual taxpayers who filed 2016 tax extensions with an October 16, 2017, tax deadline. The IRS noted, however, if tax payments were owed on 2016 tax returns those payments are not eligible for extended relief since they were due on April 18, 2017.
• 2018 Quarterly Estimated Tax Payments: Quarterly estimated tax deadlines of January 16, 2018, are extended until January 31, 2018.
• Quarterly Payroll and Excise Tax Returns:– Quarterly payroll and excise tax returns that are due October 31, 2017, are extended until January 31, 2018.

Calendar-year tax-exempt organizations whose 2016 extensions run out on Nov. 15, 2017, also qualify for the extra time.

The IRS is currently providing relief to seven California counties: Butte, Lake, Mendocino, Napa, Nevada, Sonoma and Yuba. Individuals and businesses in these localities, as well as firefighters and relief workers who live elsewhere, qualify for the extension. The agency will continue to closely monitor this disaster and may provide other relief to these and other affected localities.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. Thus, taxpayers need not contact the IRS to get this relief. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, the taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area, but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes firefighters and workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals or businesses who suffered uninsured or unreimbursed disaster-related casualty losses can choose to claim them on either the tax return for the year the loss occurred (in this instance, the 2017 return filed in 2018), or the loss can be deducted on the tax return for the prior year (2016). That means if you were on an extension for 2016 you may be able to claim your casualty losses on your 2016 extended tax return.

The tax relief is part of a coordinated federal response to the damage caused by these wildfires and is based on local damage assessments by FEMA. For information on disaster recovery, visit disasterassistance.gov.

Check back with the blog for more updates on disaster relief.