Beginning on April 12, 2020, and into April 13, 2020, there were at least 140 confirmed tornadoes in parts of the southern United States. More than 1 million homes and businesses lost power during the storms.
Now, the Internal Revenue Service (IRS) has announced that victims of the April tornadoes, severe storms, and flooding that took place in parts of Mississippi, Tennessee, and South Carolina, will have until October 15, 2020, to file various individual and business tax returns and make tax payments.
The IRS is offering this relief to any area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance. This includes Clarke, Covington, Grenada, Jasper, Jefferson Davis, Jones, Lawrence, Panola, and Walthall counties in Mississippi, Bradley, and Hamilton counties in Tennessee and Aiken, Barnwell, Berkeley, Colleton, Hampton, Marlboro, Oconee, Orangeburg and Pickens counties in South Carolina. Any taxpayers in areas added later to the disaster area will automatically receive the same filing and payment relief. The current list of eligible localities is always available on the disaster relief page on the IRS website.
Here’s what the relief entails: Most tax filing and payment deadlines, which began starting on April 12, 2020, will be extended. That means that affected individuals and businesses will have until October 15, 2020, to file returns and pay any taxes that were originally due during this period. This includes 2019 individual and business returns that, due to COVID-19, were due on July 15, 2020, as well as various 2019 business returns due on March 15, 2020. This also means that affected taxpayers will have until October 15, 2020, to make 2019 IRA contributions.
Returns and payments that were originally due during this period, including the first three quarterly estimated tax payments (those due July 15 and September 15), will now be due on October 15, 2020. The October 15 deadline also applies to quarterly payroll and excise tax returns typically due on April 30 and July 31.
Relief also includes a waiver of late-deposit penalties for federal payroll and excise tax deposits typically due on or after April 12, 2020, and before April 27, 2020, so long as the deposits were made by April 27, 2020.
The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. That means that taxpayers do not need to contact the IRS to get this relief. However, if you receive a late filing or late payment penalty notice from the IRS and are entitled to relief, you should call the number on the notice to have the penalty abated.
The IRS will work with any taxpayer who lives outside the disaster area but whose records are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 1.866.562.5227 once IRS normal operations resume (see this post for more on IRS operations). This includes workers assisting the relief activities that are affiliated with a recognized government or charitable organization.
Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on the return for the year the damage occurred – in this instance, the 2020 return filed next year – or the return for the prior year (2019). This means that taxpayers can, if they choose, claim these losses on the 2019 return they fill out this tax season. Be sure to write the FEMA declaration number – (4536 for Mississippi, 4541 for Tennessee and 4542 for South Carolina) − on any return claiming a loss.
However, remember that the deduction for personal casualty and theft losses has been repealed for the tax years 2018 through 2025 except for those losses attributable to a federal disaster as declared by the President. For more on casualty losses after a disaster, click here.
For more details on available tax relief, you can also check out the disaster relief page on IRS.gov. For information on government-wide efforts related to disaster recovery, visit disasterassistance.gov.