Last week NE Tennessee was hit by some powerful storms that caused extensive damage to both personal and business property. The President has declared four Tennessee counties to be federal disaster areas: Bradley, Hamilton, Washington and Greene. Two of those counties are in our region. Our thoughts and prayers are with those who lost family and friends or their homes or businesses in the storm and we have made contributions to the Red Cross to support local relief efforts.
One of the consequences of the President’s declaration is that the IRS is providing tax relief for the filing deadlines for most types of tax returns, including payroll returns, and the payment due dates for most tax payments. Businesses in these areas need to know that there may some tax filing relief that may help them.
Specifically payroll related, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after April 25 and on or before May 10, 2011, as long as the deposits were made by May 10, 2011. Specifically, 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 April 25 and on or before May 10 provided the taxpayer made these deposits by May 10.
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 hot-line at 1-866-562-5227 to request this tax relief.
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. For example, a business in Sullivan County that uses a CPA firm in Greene County to perform all of their accounting functions would be eligible for this relief.
The IRS will also grant relief to affected taxpayers until June 30 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 April 25 and on or before June 30. They will also grant relief to affected taxpayers regarding other time-sensitive actions related to making contributions to qualified retirement plans, filing claims, etc.
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 research this topic, download forms and publications from the official IRS Web site, irs.gov, or order forms by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.