Since January 2017, FEMA has issued three Emergency Declarations, four Major Disaster Declarations, and one Fire Management Assistance Declaration (FMAD) for the State of Georgia. These were related to hurricanes Michael, Dorian, and Irma, as well as severe storms, tornados, and straight-line winds. The FMAD was issued for the Mims fire. The IRS offers relief to taxpayers affected by disasters.
A taxpayer does not need to be located in a federally declared disaster area to be an “affected taxpayer” for purposes of special treatment. Taxpayers are “affected” if any records necessary to meet a filing or payment deadline postponed during the relief period are located in an official disaster area.
Disaster relief also applies to tax preparers who are unable to file returns or make payments on behalf of a client because of the disaster.
An affected taxpayer may be:
- An individual;
- Any business entity or sole proprietor;
- Any shareholder in an S Corporation;
Because records necessary to prove loss may have been damaged or destroyed, taxpayers may have to reconstruct records after a disaster to facilitate the payment of their taxes. Reconstruction may also be necessary to receive federal assistance or insurance reimbursement.
If you are a taxpayer outside of the disaster area, you may also qualify for relief if:
- your preparer is in the disaster area, and
- the preparer is unable to file or pay on your behalf.
The due date for filing an individual income tax return is the later of the end of the postponement period or the extended due date. For example, if the postponement period ends on November 4, 2019, which is later than the extended due date of October 15, 2019, then the taxpayer’s individual income tax return is due November 4, 2019.
To get the postponement for filing or payment, a taxpayer must:
- Call the Disaster Assistance Hotline at 1-866-562-5227;
- Explain that necessary records are located in a covered disaster area; and
- Provide the FEMA Disaster Number of the county where the taxpayer’s tax preparer is located.
While the IRS policy on waiving interest does not apply to any balances due on prior-year tax liabilities, the IRS will consider waiving late payment penalties if the tardy payment is caused by the disaster.
Any installment agreement payments that become due during the disaster relief period are suspended. Once the postponement period ends, the installment agreement is reinstated without any fee. The taxpayer is then required to resume making payments in accordance with the terms of the installment agreement beginning in the month that follows the month in which the postponement period ends.