With Hurricane Sandy receiving constant media attention for its high-powered winds, intense flooding, and record-breaking waves, there is an equally powerful side of the storm the general public has not yet seen: its ability to change the tax landscape. As the storm moves on and you survey the damage done and begin to rebuild, you should keep the information below in mind.
Extended Due Dates
Hurricane Sandy has been declared either a Major Disaster or Emergency by 12 states along the east coast. Disaster declarations have the ability to extend the due dates for tax returns and payments.
While the Internal Revenue Service announced on Wednesday October 31, 2012, in IR-2012-82, that taxpayers and tax preparers affected by Hurricane Sandy had until November 7, 2012 to file returns and accompanying payments normally due October 31, 2012, this extension was overridden on Friday by a longer and broader extension. In the e-News for Tax Professionals 2012-44, the IRS postponed various tax filing and payment deadlines starting in late October 2012 until February 1, 2013. This extension includes 4th quarter estimated payments usually due January 15, 2013, along with 3rd and 4th quarter payroll and excise tax returns and payments normally due October 31, 2012 and January 31, 2013, respectively. Additionally, tax-exempt organizations required to file Form 990 series returns during this period (whether by regular due date or extension) may be filed as late as February 1, 2013 without being considered late. This extension applies automatically to the local counties listed below (no action is required to obtain the extension):
**Updated** Select counties in NJ and NY have been granted additional releif and have had tax deadlines automatically extended until April 1. See below for details.
In Connecticut: Fairfield, Middlesex, New Haven, and New London Counties and the Mashantucket Pequot Tribal Nation and Mohegan Tribal Nation located within New London are extended to February 1.
In New Jersey: Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Morris, Passaic, Salem, Somerset, Sussex, Union and Warren counties are extended to February 1.
**Monmouth and Ocean counties are extended to April 1.**
In New York: Bronx, Kings, New York, Orange, Putnam, Rockland, Sullivan, Ulster and Westchester are extended to February 1.
**Nassau, Queens, Richmond and Suffolk counties are extended to April 1.**
In Rhode Island: Newport and Washington counties are extended to February 1.
The IRS has also announced its willingness to work with taxpayers who reside outside the above listed areas, but whose books, records, or tax professionals are located in areas affected by Hurricane Sandy. If you live outside the areas listed above, you may also contact the IRS at 866-562-5227 to request tax filing relief. Further details will be posted on the IRS Help for Victims of Hurricane Sandy web-page.
New York postponed certain tax filings and payment deadlines for taxpayers who were directly affected by Sandy. All deadlines for the acts listed in the announcement that fell between October 26, 2012, and November 26, 2012, have been postponed to November 26, 2012. No additional waiver is needed in order to obtain this extension; simply write “Hurricane Sandy” at the top center of the front page of the late-filed return, extension, or payment and attach a brief explanation of the circumstances that adversely affected you ability to meet the original deadline. This extension includes the upcoming MTA protective refund claim,which has a deadline of November 1, 2012.
New Jersey postponed certain tax filings and payment deadlines for taxpayers who were directly affected by Sandy. Taxpayers who cannot meet normal filing and payment deadlines because of the storm how have until November 26, 2012, to file returns and tax payments that would have been due on or after October 30, 2012 or before November 26, 2012. If you are affected by Hurricane Sandy and the due date for filing your return or for paying your tax is extended, you are eligible for an interest and penalty abatement on tax that would otherwise accrue for the period of the postponement. If you receive a billing notice from the Division related to late filings and/or payments, and the late filing or payment is due to the hurricane, call the Division at the telephone number listed on any notice you receive and explain your circumstances. Treasurer Andrew Sidamon-Eristoff also has ordered the Division of Taxation to grant hardship waivers for late filers on a case-by-case basis for business taxpayers affected by the storm. The orders granting relief from deadlines and hardship waivers apply to all 21 counties in New Jersey, and taxpayers who qualify include businesses located in New Jersey, out-of-state businesses with operations here, as well as those whose tax records or tax preparers are located in the state. Nonresident taxpayers with tax filing obligations in New Jersey who are located in other states that suffered Superstorm Sandy damage (e.g., New York, Connecticut) are also eligible for relief. You can contact the NJ Division of Taxation with any questions at (609) 292-6400.
Pennsylvania Secretary of Revenue and Secretary of Labor & Industry announced that they will generally follow IR-2012-82 with regard to certain filing and payment deadline extensions for business and individual taxpayers directly impacted by Hurricane Sandy. The 2012 Pennsylvania disaster recovery deadline extension generally applies to inheritance tax, employer withholding and motor carrier road tax/IFTA tax filings and payments with due dates between October 29, 2012 and October 31, 2012. The deadline extension also applies to unemployment compensation tax filings for third quarter 2012 that were due October 31, 2012. Such filings may now be filed as late as November 7, 2012. No special action or notice is required by the taxpayer, as the deadline extensions will automatically be honored.
Connecticut has also announced an extension for taxes previously due October 31, 2012 to be pushed back to November 7, 2012. For more details regarding Connecticut’s tax extension, including details about which taxpayers and tax returns are eligible, please see The Connecticut Department of Revenue’s official release.
Additionally, CT taxpayers that are unable to comply with the above stated deadline, may be eligible for additional penalty and interest relief. In order to apply, taxpayers must fill out 2012 Storm Sandy Relief Request Form. More information can be found on the CT Department of Revenue’s website.
Massachusetts announced on November 6, 2012 that the due dates for certain tax returns and payments originally due between Oct 29, 2012 and Jan 31, 2013 will be extended to February 1, 2013 for affected taxpayers. This includes estimated payments due in January 2013. For more information see the MA Press Release.
Rhode Island Division of Taxation has announced that it is postponing corporate, personal, sales and use, and estate tax among other tax filing deadlines and offering additional relief to taxpayers in Newport County and Washington County in Rhode Island. The relief is provided to taxpayers who reside in either Newport or Washington County, and businesses and other entities whose principal location is in either county. In addition, the relief applies to those elsewhere whose records were in either county when the storm struck and such records are needed to meet a Rhode Island state tax deadline. Further, the relief applies to relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in either or both counties. Any sales or use tax deposit or employer tax payment that is due between October 26, 2012 and November 26, 2012 are due by 11:59 p.m. on November 26, 2012. Any other original or extended filings or payments due between October 26, 2012 and February 1, 2013 are due by 11:59 p.m. on February 1, 2013. Such relief includes, but are not limited to, filings and payments of personal, trust income, estate income, partnership, estate, trust, and business returns (including C corporations, S corporations, and pass-through entities). The same relief applies to fourth quarter estimated payment of personal income tax that would normally be due on January 15, 2013. No action is required by taxpayers or preparers to obtain the relief. Taxpayers qualifying for the relief will not be subject to interest or penalty for taking advantage of the extended deadlines.
As the states and federal government continue to revise tax filing plans for Hurrican Sandy relief, The Tax Warriors will be sure to keep you updated and note all significant changes on our website.
Individuals and businesses are able to claim casualty loss deductions on their tax returns for property damage caused by Hurricane Sandy. Significant damage caused by the storm can result in considerable tax savings, however, it is important that the correct steps be taken in order to properly document and claim your loss. If any of your property has incurred damage due to the storm, please read our previously posted Casualty Loss blog post before beginning your clean up and repairs to ensure you receive the deduction your entitled to on your tax returns.
Tax-Free Disaster Relief
There are also many disaster relief options to available to those affected by Hurricane Sandy. If you reside in one of the presidentially declared disaster areas you can apply for federal aid through FEMA’s online application. If you are a homeowner, renter, or business of any size, you may also be eligible to apply for low-interest loans from the U.S. Small Business Administration.
Although we are aware that the taxability of disaster relief is not at the forefront of you mind, as the Tax Warriors, we are more than inclined to tell you that under IRC Section 139, qualified disaster relief payments are not subject to tax. As long as you have not already been reimbursed for the same expense by insurance and the relief is not meant to compensate you for lost income or wages, relief payments are not subject to income or payroll taxes. Additionally, tax-free disaster relief payments are not restricted to government provided assistance; relief payments from federal agencies, state agencies, employers and charitable organizations are all exempt from income and payroll taxes.
If you have any questions regarding the information above or any other questions regarding the tax implications of Hurricane Sandy, you can Ask a Tax Warrior by clicking the button below. If you want to help the hundreds of thousands of people that have been affected by Hurricane Sandy (and also receive a tax deduction) you can donate to The American Red Cross here.
Click on the links below to read other Hurricane Sandy related articles from our blog: