Hurricane Ida may be gone but the damage she inflicted and the emergency conditions she created will remain for some time to come. To enable all the resources of the federal government to be available for disaster relief, President Biden issued emergency declarations under Title V of the Stafford Act for New Jersey and 14 New York counties.
The relief comes not only in the form of emergency aid from the Federal Emergency Management Agency (FEMA) but also in the form of additional time for any taxpayer determined to be affected by a federally declared disaster to file federal tax returns and make federal tax payments. On August 31, the Internal Revenue Service (IRS) issued a notice initially covering the entire state of Louisiana and another notice covering Louisiana and any area that FEMA has designated as qualifying for public assistance, which arguably covered New Jersey and the 14 New York counties cited in President Biden’s declarations.
The IRS, however, has now clarified that it is offering relief to taxpayers in Bronx, Kings, New York, Queens, Richmond and Westchester counties in New York and in Bergen, Gloucester, Hunterdon, Middlesex, Passaic and Somerset counties in New Jersey. These are the counties listed in FEMA declarations 4615 (covering the six New York counties) and 4614 (covering the six New Jersey counties), respectively.
The notice provides the following relief:
- Affected individuals and businesses will have until January 3, 2022, to file returns and pay any taxes that were originally due beginning September 1, 2021
- Individuals who had a valid extension to file their 2020 return, which is due to run out on October 15, 2021, will now have until January 3, 2022, to file
- Tax payments related to these 2020 returns were due on May 17, 2021, so those payments are not eligible for this relief
- Quarterly estimated income tax payments due on September 15, 2021, are now due January 3, 2022
- Quarterly payroll and excise tax returns normally due on November 1, 2021, are now due January 3, 2022
- Tax-exempt organizations, operating on a calendar-year basis, that have a valid extension due to run out on November 15, 2021, may now file by January 3, 2022
- Calendar-year partnerships and S corporations whose 2020 extensions run out on September 15, 2021, and calendar- year corporations whose 2020 extensions run out on October 15, 2021, as well as fiscal year businesses with returns originally due, or with extensions, on or after September 1, 2021, also have the additional time to file until January 3, 2022
- Individuals and businesses who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2021 return normally filed next year), or the return for the prior year (2020). Either way, be sure to write the FEMA declaration number – 4614 for New Jersey or 4615 for New York − on any return claiming a loss.
Affected taxpayers are eligible for relief from interest, penalties or additions to tax during the postponement period.
This relief is automatic for any taxpayer with an address of record in the disaster area. You do not need to contact the IRS to qualify for relief. Those who live outside the disaster area but whose records necessary to meet a filing deadline are located within a disaster area may qualify for relief but must call the IRS at 866-562-5227 to confirm the postponement of their deadlines.
|NOTE: As of the release of this Alert, the New York Department of Taxation and Finance has not indicated whether it will postpone its filing or estimated payment deadlines. The New Jersey Division of Taxation, however, has announced that it “is following the federal guidelines for tax relief as recently provided in the Internal Revenue Service” announcements issued on August 31, 2021. This relief is for affected taxpayers “located in the disaster areas and whose tax records are in the disaster areas, and relief workers,” but, as mentioned above, the IRS has subsequently clarified that only some, and not all, New Jersey counties are considered disaster areas for purposes of federal relief. The set of taxpayers eligible for additional time to meet New Jersey’s filing and paying obligations is therefore somewhat questionable at this time. Taxpayers may email the New Jersey Division of Taxation with questions about Hurricane Ida tax relief.|
At the time of this writing, we are only aware of relief related to the filing of certain returns and payment of certain estimated taxes. In the past, the IRS has exercised its authority to postpone deadlines for other time limited actions such as completing certain steps to qualify for tax-deferred exchanges of real property or non-recognition of gain on certain involuntary conversions. We do not yet know if the Service will use its authority to grant such postponements in this instance.
As always, your Friedman LLP advisor stands ready to help you determine how to best take advantage of this relief. Contact us now with any questions.