With few exceptions, the identification and exchange periods are fixed but the Treasury may extend both of those time periods if an exchanger is directly affected by presidentially declared disasters or any terroristic or military action. See IRC § 7508A.
These extensions are not automatic and the IRS must provide notice under Rev.Proc. 2005-27.
The IRS has created special rules for determining whether an exchanger qualifies for the disaster extension. See: Rev Proc. 2005-27
All exchangers should seek counsel from their Tax Advisor to be sure they qualify under the above regulations before proceeding with their exchange.
Tax Relief for Victims of Severe Storms, Tornadoes, Straight-line Winds and Flooding in Texas
Updated July 22, 2015, to include Red River county.
Updated July 20, 2015, to include Hood, Madison, Shelby and Wharton counties.
Updated July 10, 2015, to include Angelina, Erath, Frio, Jim Wells, Montgomery and Trinity counties.
Updated July 6, 2015, to include Bowie, Brazoria, Cherokee, Ellis and Harrison counties.
Updated June 25, 2015, to include Fayette county.
Updated June 17, 2015, to include Cooke, Dallas, Fannin, Grayson, Liberty, Nueces and Walker counties.
Updated June 8, 2015, to include Bastrop, Blanco, Caldwell, Denton, Eastland, Fort Bend, Gaines, Guadalupe, Henderson, Hidalgo, Johnson, Milam, Montague, Navarro, Rusk, Smith, Travis, Wichita, Williamson, and Wise counties.
HOU-05-2015, June 2, 2015
TEXAS — Victims of the severe storms, tornadoes, straight-line winds and flooding that took place beginning on May 4, 2015 in parts of Texas may qualify for tax relief from the Internal Revenue Service.
Following recent disaster declarations for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in Texas will receive tax relief.
The President has declared Angelina, Bastrop, Blanco, Bowie, Brazoria, Caldwell, Cherokee, Cooke, Dallas, Denton, Eastland, Ellis, Erath, Fort Bend, Fannin, Fayette, Frio, Gaines, Grayson, Guadalupe, Harris, Harrison, Hays, Henderson, Hidalgo, Hood, Jim Wells, Johnson, Liberty, Madison, Milam, Montague, Montgomery, Navarro, Nueces, Red River, Rusk, Shelby, Smith, Travis, Trinity, Van Zandt, Walker, Wharton, Wichita, Williamson, and Wise counties a federal disaster area. Individuals who reside or have a business in these counties may qualify for tax relief.
The declaration 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 May 4, and on or before Nov. 2, have been postponed to Nov. 2, 2015. This includes the May 15 deadline for many tax-exempt organizations to file their annual Form 990. It also includes the June 15 and Sept. 15 deadlines for making quarterly estimated tax payments. A variety of business tax deadlines are also affected including the July 31 deadline for quarterly payroll and excise tax returns.
In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after May 4, as long as the deposits were made by May 19, 2015.
If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.
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.
Covered Disaster Area
The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.
Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.
Grant of Relief
Under section 7508A, the IRS gives affected taxpayers until Nov. 2 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after May 4 and on or before Nov. 2.
The IRS also gives affected taxpayers until Nov 2 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after May 4 and on or before Nov. 2.
This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.
The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after May 4 and on or before May 19 provided the taxpayer made these deposits by May 19, 2015.
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 this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Texas, Severe Storms, Tornadoes, Straight-line Winds and Flooding” at the top of the form so that the IRS can expedite the processing of the refund.
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 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 order them by calling 800-829-3676. The IRS toll-free number for general tax questions is 800-829-1040.