The California wildfires and the Iowa derecho that occurred this summer have wreaked havoc on area residents. While federal disaster relief is available, the IRS recently released information on assistance it may offer. According to the IRS, victims of the latest California wildfires and the August 10th Iowa derecho now have until December 15, 2020 to file individual and business tax returns and make payments. It is not necessary for taxpayers to indicate on the return they are in a disaster zone. The IRS will automatically provide filing and penalty relief to any taxpayer within these disaster areas.
FEMA designated the following areas for disaster relief: Linn County in Iowa and Lake, Monterey, Napa, San Mateo, Santa Cruz, Solano, Sonoma, and Yolo counties in California. Any additional areas added to disaster relief status will automatically be provided the same relief. An updated list of affected localities can be found on the disaster relief page at IRS.gov. In the event an affected taxpayer does receive a penalty notice, the IRS recommends calling the number on the notice to have the penalty abated.
Taxpayers with a valid extension to file their return by October 15, 2020 will now have until December 15, 2020 to file their tax returns and make payments due during this time period. The IRS noted that tax payments related to 2019 returns that were due on July 15, 2020 are not eligible for this relief.
The December 15, 2020 deadline also applies to quarterly estimated income tax payments due on September 15, 2020, and the quarterly payroll and excise tax returns normally due on October 31, 2020. It also applies to tax-exempt organizations, operating on a calendar-year basis, that had a valid extension due to run out on November 15, 2020. Businesses with extensions also have the additional time including, among others, calendar-year corporations whose 2019 extensions run out on October 15, 2020.
Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them in the year the loss occurred (2020) or in the prior year tax return (2019). These returns must have the FEMA declaration number on any return claiming the loss: 4558 for California or 4557 for Iowa. See Publication 547 for details.
For information on disaster recovery, visit disasterassistance.gov.
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.