Iowans Impacted by Recent Storms Are Eligible for Limited Tax Relief
Many Iowans have been impacted by recent severe storms. This post summarizes relevant notices and relief issued by IRS, FEMA, and the Iowa Department of Revenue.
May 20 Storms
On June 6, 2024, the IRS announced tax relief for individuals and businesses in Iowa that were affected by severe storms, tornadoes, and flooding that occurred on May 20, 2024. The relief gives these taxpayers until November 1, 2024, to file various federal individual and business tax returns and make certain tax payments.
The announcement stems from disaster declaration, DR-4784, issued by the Federal Emergency Management Agency on May 24, 2024. It applies to individuals and households that reside in or have a business in Adair, Montgomery, Polk, and Story Counties in Iowa. 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. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured because of the disaster are entitled to relief.
The tax relief applies only to deadlines falling on or after May 20, 2024, and before November 1, 2024. Covered individuals and businesses generally have until November 1, 2024, to file returns and pay any taxes that were originally due during this period, including the following returns that have an original or extended due date occurring on or after May 20, 2024:
- individual returns
- corporate returns
- estate and trust income tax returns
- partnership returns
- S corporation returns
- trust returns
- estate, gift, and generation-skipping transfer tax returns
- annual information returns of tax-exempt organizations
- employment and certain excise tax returns (not including payroll and excise tax deposits)
Affected taxpayers that have an estimated income tax payment originally due on or after May 20, 2024, will not be subject to penalties for failure to pay estimated tax installments if such payments are paid on or before November 1, 2024. The November 1 deadline applies to certain payments normally due during this period, including the quarterly estimated tax payments due on June 17, 2024, and September 16, 2024
The notice also gives affected taxpayers until November 1, 2024, to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2018-58 that are due to be performed on or after May 20, 2024, and before November 1, 2024, including the filing of the Form 5500 series returns. Additionally, the relief described in section 17 of Rev. Proc. 2018-58, pertaining to like-kind exchanges of property, applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.
The notice states that unless an act is specifically listed in Rev. Proc. 2018-58, the postponement of time to file and pay does not 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. However, penalties on deposits due on or after May 20, 2024, and before June 4, 2024, will be abated as long as the tax deposits were made by June 4, 2024. Quarterly payroll and excise tax returns normally due on July 31, 2024, and October 31, 2024, are now subject to the November 1, 2024, deadline.
April 26 Storms
On May 17, the IRS announced tax relief for individuals and businesses in Iowa that were affected by severe storms and tornadoes that occurred on April 26, 2024. The relief gives these taxpayers until October 15, 2024, to file various federal individual and business tax returns and make tax payments.
The announcement stems from disaster declaration, DR-4779, issued by the Federal Emergency Management Agency on May 14, 2024. It applies to individuals and households that reside in or have a business in Clarke, Harrison, Mills, Polk, Pottawattamie, Ringgold, Shelby, and Union Counties in Iowa. 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. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured because of the disaster are entitled to relief.
The tax relief applies only to deadlines falling on or after April 26, 2024, and before October 15, 2024. It generally applies to the quarterly estimated tax payments due on June 17 and September 16, 2024, and the quarterly payroll and excise tax returns normally due on April 30, 2024, and July 31, 2024. While not generally applicable to payroll and excise tax deposits, the relief provides that penalties on payroll and excise tax deposits due on or after April 26, 2024, and before May 13, 2024, will be abated as long as the tax deposits were made by May 13, 2024.
Instructions Applying to Both Disaster Announcements
If a taxpayer impacted by either of the above storms receives a penalty notice from the IRS that has an original filing, payment, or deposit due date that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty.
The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area should call the IRS disaster hotline at 866-562-5227 to request this tax relief. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk Requests from Practitioners for Disaster Relief option, described on IRS.gov.iowa.
Iowa’s Disaster Emergency Tax Penalty Relief
On May 29, 2024, the Iowa Department of Revenue released new guidance explaining how taxpayers impacted by recent weather disasters can seek tax penalty relief. The relief applies to the following counties for which Governor Reynolds has issued a Proclamation of Disaster Emergency:
- Pottawattamie (April 26)
- Clarke, Crawford, Harrison, Mills, Polk, Ringgold, Shelby, and Union (April 29)
- Clarke, Marion, O’Brien, and Pottawattamie (May 8)
- Adair, Adams, Cass, Clay, Hardin, Harrison, Jasper, Kossuth, Marshall, Montgomery, Page, Palo Alto, Pottawattamie, Tama, and Warren (May 21)
- Black Hawk, Buena Vista, Butler, Cedar, Clinton, Dubuque, Fayette, Franklin, Hancock, Humboldt, Iowa, Jackson, Mills, Muscatine, O'Brien, Polk and Story (May 22)
- Calhoun, Cerro Gordo, Johnson, Keokuk, Marion, Scott, Shelby, Union, Washington, and Wright (May 24)
- Dallas, Poweshiek, and Webster (May 28)
- Kossuth and O’Brien (June 3)
- Dubuque and Emmet (June 6)
The notice states that tax penalty relief extends to taxpayers in these counties who missed deadlines to file or pay Iowa taxes because records were destroyed by these storms. It continues by stating that taxpayers can request penalty relief by submitting a penalty waiver request on GovConnectIowa or by submitting a Penalty Waiver Request, if the taxpayer:
- Missed a filing or payment deadline falling on or after the date of the relevant disaster proclamation due to the disaster, and
- Is assessed a late file or late pay penalty
This tax penalty relief does not extend the due date for any return or payment due to the Iowa Department of Revenue.