Victims of 2018 California Wildfires Granted Tax Relief

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In the aftermath of recent destruction caused by the California wildfires, the Internal Revenue Service (IRS) announced that individuals and businesses in Butte, Los Angeles and Ventura counties may qualify for tax relief.

An emergency declaration made by the President permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after November 8, 2018 and before April 30, 2019, will be granted additional time to file through April 30, 2019. This includes 2018 individual income tax returns and payments normally due on April 15, 2019.

It also includes the quarterly estimated income tax payments due on January 15, 2019 and April 15, 2019 and the quarterly payroll and excise tax returns normally due on January 31, 2019. Tax-exempt organizations that operate on a calendar-year basis and had an automatic extension due to run out on November 15, 2018 may also qualify for relief.

Penalties on payroll and excise tax deposits due on or after November 8, 2018, and before Nov. 23, 2018, will be abated as long as the deposits are made by November 23, 2018. 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 that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at (866) 562-5227 to request this tax relief.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either the year in which the event occurred, or the prior year. Individuals may deduct personal property losses that are not covered by insurance or other reimbursements.

Affected taxpayers claiming the disaster loss on a 2018 return should put the Disaster Designation, “California, Wildfires” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation “California, Wildfires” in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case. Taxpayers may download forms and publications from the official IRS website, irs.gov, or call (800) 829-3676 to request a hard copy.

If you or someone you know is was affected by the recent California wildfires and need assistance determining what relief may be available, please CONTACT US right away. We’re here to help!