IRS Grants Tax Filing and Payment Relief to 11 Iowa Counties Impacted by Derecho
Update: on September 1, individual assistance was extended to:
- Benton (County)
- Boone (County)
- Cedar (County)
- Jasper (County)
- Linn (County)
- Marshall (County)
- Polk (County)
- Poweshiek (County)
- Scott (County)
- Story (County)
- Tama (County)
This means that these 11 Iowa counties are eligible for the relief detailed below.
On August 24, 2020, IRS announced that some victims of the August 10 derecho in Iowa would qualify for tax filing and payment relief. This relief is available for counties designated as a federal disaster area qualifying for individual assistance. As of August 27, Linn County continues to be the only Iowa county eligible for this relief. If and when other Iowa counties qualify for individual disaster assistance, the IRS will automatically include them in the relief. The IRS relief applies to the following “affected taxpayers”:
- Those who live in the designated county
- Those who have a business in the designated county
- Those who do not live in the area but whose records necessary to meet an impacted deadline are in the designated county
- All relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area
- Any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.
The IRS announcement specifies the following relief:
- Under IRC § 7508A, the IRS gives affected taxpayers until December 15, 2020, 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; annual information returns of tax-exempt organizations; and employment and certain excise tax returns), that have either an original or extended due date occurring on or after August 10, 2020, and before December 15, 2020.
- Note that this also extends the due date for tax payments, except for tax payments related to extended individual returns. These tax payments were due on July 15, 2020.
- Affected taxpayers that have an estimated income tax payment originally due on or after August 10, 2020, and before December 15, 2020, will not be subject to penalties for failure to pay estimated tax installments, as long as such payments are paid on or before December 15, 2020.
- This applies to third quarter estimates due September 15, 2020, and quarterly payroll and excise tax returns normally due November 2, 2020.
- Affected taxpayers have until December 15, 2020 to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2018-58, 2018-50 IRB 990 (December 10, 2018), that are due to be performed on or after August 10, 2020, and before December 15, 2020. These time-sensitive actions include:
- Filing a petition with the Tax Court, or for review of a decision rendered by the Tax Court
- Filing a claim for credit or refund of any tax
- Bringing suit upon a claim for credit or refund of any tax
- Rev. Proc. 2018-58 provides a detailed table listing a number of other time-sensitive actions entitled to relief. This includes deadlines for section 1031 like-kind exchanges.
- This relief also includes the filing of Form 5500 series returns that were required to be filed on or after August 10, 2020, and before December 15, 2020, in the manner described in section 8 of Rev. Proc. 2018-58.
- The relief described in section 17 of Rev. Proc. 2018-58, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.
IRS states in the announcement 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 August 10, 2020, and before August 25, 2020, will be abated as long as the tax deposits are made by August 25, 2020.
Claiming the Relief
The declaration states that if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended 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 relief.
Affected taxpayers in a federally declared disaster area may disaster-related casualty losses on their federal income tax return for either the year in which the event occurred, or the prior year. They are also eligible to deduct personal property losses not covered by insurance or other reimbursements. Affected taxpayers claiming the disaster loss on a 2019 or 2020 return should put the Disaster Designation, "Iowa derecho," in bold letters at the top of the form. They must include the disaster declaration number, FEMA 4557, on any return. See Publication 547 for details.
The announcement states that IRS will also waive the usual fees and requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation "Iowa derecho," in bold letters at the top of Form 4506, Request for Copy of Tax Return (PDF), or Form 4506-T, Request for Transcript of Tax Return (PDF), as appropriate, and submit it to the IRS. 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.
The Center for Agricultural Law and Taxation does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. The Center's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.