IRS Provides Disaster Relief Due to Midwest Floods

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FEMA announced major disaster declarations for Nebraska on March 21, 2019, and Iowa on March 23, 2019, due to the severe winter storms, straight-line winds and flooding that occurred in March. While victims begin the rebuilding process, the IRS has provided tax relief for qualified taxpayers in certain Nebraska and Iowa counties/areas. Individuals or businesses whose principal place of business is located in the following covered disaster areas—as well as taxpayers whose records necessary to meet a deadline listed in Treasury Regulation Section 301.7508A-1(c) are in the covered disaster areas—may qualify for tax relief.

Nebraska (Counties)

  • Antelope
  • Boone
  • Boyd
  • Buffalo
  • Burt
  • Butler
  • Cass
  • Colfax
  • Cuming
  • Custer
  • Dodge
  • Douglas
  • Hall
  • Howard
  • Knox
  • Madison
  • Nance
  • Nemaha
  • Pierce
  • Platte
  • Richardson
  • Saline
  • Sarpy
  • Saunders
  • Stanton
  • Thurston
  • Washington
  • Santee Sioux Nation

Iowa (Counties)

  • Fremont
  • Harrison
  • Mills
  • Monona
  • Woodbury

Filing/Payment Deadline Relief

Nebraska

Tax returns with an original or extended due date on or after March 9, 2019, and before July 31, 2019, with an address of record in an identified disaster area have until July 31, 2019, to file most 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; Form 5500 series returns; employment and certain excise tax returns; and annual information returns of tax-exempt organizations).

Taxpayers with an estimated income tax payment originally due on or after March 9, 2019, and before July 31, 2019, won’t be subject to penalties for failure to pay estimated tax installments if such payments are made on or before July 31, 2019. This includes any payments due on April 15, 2019, e.g., balance due on an individual’s 2018 Form 1040.

Postponement of time to file and pay doesn’t apply to information returns in the W-2, 1094, 1095, 1097, 1098 or 1099 series; to Forms 1042-S, 3921, 3922 or 8027; or to employment and excise tax deposits. Penalties for deposits due on or after March 9, 2019, and before March 25, 2019, will be abated as long as the tax deposits were made by March 25, 2019.

Iowa

Tax returns with an original or extended due date on or after March 12, 2019, and before July 31, 2019, with an address of record in an identified disaster area have until July 31, 2019, 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; Form 5500 series returns; employment and certain excise tax returns; and annual information returns of tax-exempt organizations).

Taxpayers with an estimated income tax payment originally due on or after March 12, 2019, and before July 31, 2019, won’t be subject to penalties for failure to pay estimated tax installments if such payments are made on or before July 31, 2019. This includes any payments due on April 15, 2019, e.g., balance due on an individual’s 2018 Form 1040.

Postponement of time to file and pay doesn’t apply to information returns in the W-2, 1094, 1095, 1097, 1098 or 1099 series; to Forms 1042-S, 3921, 3922 or 8027; or to employment and excise tax deposits. Penalties for deposits due on or after March 12, 2019, and before March 27, 2019, will be abated as long as the tax deposits were made by March 27, 2019.

State Tax Compliance

Nebraska

The Nebraska Department of Revenue stated that taxpayers whose primary residence or business is located within the ZIP codes listed here will follow the federal extended due date. Taxpayers affected by the disaster who reside outside the listed counties or ZIP codes may be granted relief depending on individual circumstances.

Iowa

The Iowa Department of Revenue stated it will follow extended federal due dates for the federally declared disaster counties listed above. Iowa granted additional counties, listed here, a 30-day extension and a suspension of penalties and interest for tax filings due on or before March 31, 2019. Additional state conformity should be evaluated on a state-by-state basis. Taxpayers who don’t file timely in other states may consider applying for abatement of penalties and/or interest due to late filing.

Loss Reporting

Affected taxpayers in a federally declared disaster area have the option to claim disaster-related casualty losses on their federal income tax returns either in the tax year of the loss or on the prior year’s return. Claiming the loss on an original or amended return for the prior tax year may provide an acceleration of any benefit, but consideration should be given to potential tax rate differentials between years and other taxpayer-specific factors.

Contributions to Midwest Victims

There are many outlets organizing assistance for Midwest disaster victims. Those planning to make contributions should exercise caution when selecting organizations. To verify an organization’s tax exemption and evaluate how it operates and spends contributions, visit the IRS Tax Exempt Organization Search page.

Action Required

Federal late filing or late payment penalties for qualifying taxpayers should automatically be abated if the address requirements are met. If taxpayers receive a penalty assessment despite having a qualifying address of record, they should contact the IRS at the number on the notice to request abatement under the disaster relief provisions.

Taxpayers who are affected by the Midwest disasters but reside or have a business outside the covered disaster area should call the IRS disaster hotline at 866.562.5227 to request the above federal relief. Additional information and contacts are available at www.disasterassistance.gov.

For other questions specific to your business or tax matters, contact Brittany or your trusted BKD advisor.


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