The United States has faced several weather emergencies in 2017, with Hurricanes Harvey and Irma dominating the news cycle in August and September. While life-threatening concerns will obviously take first priority, tax issues become important once physical safety is achieved. As individuals and business owners turn to their CPAs for help, this month’s column addresses tax and other resources for disaster recovery. Readers are also referred to the following CPA Journal articles: “Tax and Financial Aspects of Disasters: In the Wake of Hurricane Harvey” (James R. Grimaldi, James A.J. Revels, and Sidney Kess, updated August 2017, http://bit.ly/2wJqxWR) and “Casualty Loss Deductions and Other Hurricane-Related Tax Benefits” (Elizabeth Forspan and Robert S. Barnett, updated September 2017, http://bit.ly/2xy5j27).
Internal Revenue Service
The IRS has a substantial amount of organized information on its website (http://www.irs.gov) for Hurricanes Harvey and Irma, as well as other general disaster resources. The IRS website was also recently redesigned to be more mobile-friendly for taxpayers, which, at least for the time being, makes it less computer-friendly for tax practitioners. This month’s column should help CPAs locate IRS materials to help individuals and businesses facing the tax issues that accompany natural disasters.
A good place to start is the IRS Tax Relief in Disaster Situations main page (http://bit.ly/2hjn1jK). The “Recent Tax Relief” section of the page provides links to news releases on more than a dozen weather emergency situations, beginning in January 2017 with severe storms in Georgia and Mississippi. The “Around the Nation” webpage at http://bit.ly/2fDmLIE includes a link for every U.S. state and territory, including current and archived summaries. The IRS Disaster main page also includes handy links to the Federal Emergency Management Agency (FEMA) disaster declaration search page (https://www.fema.gov/disasters) and the DisasterAssistance.gov website, hosted by several federal agencies. At the time of this writing, there are special webpages for Hurricane Harvey (http://bit.ly/2yeFJfK) and Hurricane Irma (http://bit.ly/2yfPsT3) that collate the related news releases, notices, special edition tax tips, and other guidance.
Disaster Resources at a Glance
Disaster Assistance Improvement Program (17 federal agencies) https://www.disasterassistance.gov/
Federal Emergency Management Agency (FEMA) Links to specific hurricanes, fires, and other disasters https://www.fema.gov/
IRS: Help for Victims of Hurricane Harvey https://www.irs.gov/newsroom/help-for-victims-of-hurricane-harvey
IRS: Help for Victims of Hurricane Irma https://www.irs.gov/newsroom/help-for-victims-of-hurricane-irma
IRS Publication 547: Casualties, Disasters, and Theftshttps://www.irs.gov/forms-pubs/about-publication-547
IRS Publication 2194: Disaster Resource Guide for Individuals and Businesseshttps://www.irs.gov/pub/irs-pdf/p2194.pdf
IRS: Tax Relief in Disaster Situations https://www.irs.gov/newsroom/tax-relief-in-disaster-situations
Small Business Administration Disaster Assistance https://www.sba.gov/disaster-assistance
USA.gov Disasters and Emergencies Webpage https://www.usa.gov/disasters-and-emergencies
The IRS Disaster Assistance and Emergency Relief for Individuals and Businesses portal (http://bit.ly/2f2rkwL) connects tax professionals, individuals, and small business owners to many topical IRS webpages, publications, forms, and videos, as well as links to other federal agencies. The materials are too extensive to cover in their entirety here, but one that merits particular focus is the “Preparing for a Disaster (Taxpayers and Businesses)” webpage, which emphasizes paperless record-keeping of financial and tax records, the documentation of valuables and business equipment, specific action steps in continuity of operations planning, and an annual review of emergency plans (http://bit.ly/2fln5yZ). The page includes links to IRS publications on personal and business casualty theft losses, tax forms for requesting copies or transcripts of tax returns, and a one-minute video summary.
The Disaster Relief Resource Center for Tax Professionals (http://bit.ly/2xliOQN) duplicates some of the information on other webpages, but also contains resources specific to tax practitioners.
One item that may be worth the reader’s time is the instructions for bulk requests from practitioners for disaster relief (http://bit.ly/2w8NFOY). There are also links to professional organizations, the most helpful being the American Bar Association’s Committee on Disaster Response and Preparedness (http://bit.ly/2wDjLqa).
The Disaster Assistance Self-Study section of the IRS website pulls together a tax-focused online self-study and resource guide, a detailed lesson on reporting casualty and theft gains and losses, record reconstruction tips for numerous types of property, and taxable and nontaxable disaster payments and benefits (http://bit.ly/2xhGF6f).
On a tax filing–related note, the U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN) has offered an extension of time to file Foreign Bank and Financial Account (FBAR) reports for FEMA-designated areas (http://bit.ly/2fCHXyp).
Don’t Mess with Taxes
Don’t Mess with Taxes (http://dontmesswithtaxes.typepad.com), by Texas blogger Kay Bell, is naturally poised to address Gulf Coast natural disasters, and may be a good place to start before heading to disaster-specific websites, or even the IRS website. Readers may know Bell as the principal tax columnist for Bankrate.com and the Bankrate Taxes Blog; her Don’t Mess with Taxes posts contain substantial content and useful information, including multiple links to original resources. Posts may also be updated if more information becomes available. The Weekly Tax Tip for September 13, 2017, contains very timely specific advice about digitizing tax records, which is particularly beneficial when physical records have been destroyed (http://bit.ly/2hlZeMH).
Florida Institute of CPAs Hurricane Irma Website https://irma.ficpa.org/
Georgia Society of CPAs Hurricane Disaster Relief Resources http://www.gscpa.org/content/ProfessionalResources/Hurricane-Relief-Resources.aspx
North Carolina Association of CPAs Hurricane Relief https://www.ncacpa.org/ncacpa-hurricane-relief/
Society of Louisiana Certified Public Accountants Disaster Recovery Resources http://www.lcpa.org/?page=disasterplan
Texas Society of CPAs Hurricane Harvey Assistance https://www.tscpa.org/membership/news-and-information/articles/hurricane-harvey-assistance
“IRS Grants Tax Relief to Texans Hard Hit by Hurricane Harvey” (http://bit.ly/2hlHWz6) states that the IRS is providing automatic relief for taxpayers with a tax address in the disaster area for individual, business, excise, and payroll tax returns, as well as certain excise and payroll tax deposits. Certain out-of-area taxpayers may also qualify for relief, such as “official” recovery workers. “IRS Irma Tax Relief Echoes That Given Harvey Victims” (http://bit.ly/2jNQV0z) explains that the IRS is extending the Hurricane Harvey tax relief provisions for taxpayers in the path of Hurricane Irma. Harvey- and Irma-affected individuals and businesses have until January 31, 2018, to file tax returns. Individual taxpayers can choose to claim the personal casualty loss deduction on their 2017 tax return, or on an amended or extended 2016 return.
“IRS Eases Access to Workplace Retirement Plan Money for Hurricane Harvey’s Texas Victims” (http://bit.ly/2yfJilK) notes that the IRS is providing access to loans and hardship distributions from 401(k) and other retirement plans; this has since been expanded to Irma-affected taxpayers as well. Documentation requirements may be reduced, although repayment rules are unchanged; the deadline for hardship withdrawals under the hurricane provisions is January 31, 2018.
Don’t Mess with Taxes also maintains a fantastic, regularly updated Natural Disasters Resource webpage (http://bit.ly/2hmUiXw) that is continually revised by Bell, a self-professed “weather nut.” The content is far too detailed to review here, but includes tax and nontax advice on preparation, recovery, donations, storm news reports, and other resources.