IRS Tax Relief for Victims of January Storms and Tornadoes in Alabama

Victims of the severe storms, tornadoes, straight-line winds and flooding that took place on January 22, 2012 in parts of Alabama may qualify for tax relief from the Internal Revenue Service.

President Obama has declared Chilton and Jefferson counties a federal disaster area. Individuals who reside or have a business in this county may qualify for tax relief.

Affected Taxpayers

The IRS automatically identifies taxpayers located in the covered disaster area (Chilton and Jefferson counties) and applies automatic filing and payment relief.

  • Eligible taxpayers include individuals who live, and businesses whose principal place of business is located, in the covered disaster area.
  • Affected taxpayers not in the covered disaster area, but whose records necessary to meet a deadline are in the covered disaster area, are also entitled to relief by calling the IRS disaster hotline at 1-866-562-5227.
  • 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 as a result of the disaster are entitled to relief.

Grant of Relief

The IRS gives affected taxpayers until March 22 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
  • Employment and certain excise tax returns
  • Form 5500 series returns
  • Or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after January 22 and on or before March 22.

The postponement of time to file and pay does not apply to:

  • Information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027.
    • Penalties for failure to timely file these information returns can be waived under existing procedures for reasonable cause.
  • Employment and excise tax deposits
    • However, the IRS will abate penalties for failure to make timely employment and excise tax deposits due on or after January 22 and on or before Febuary 6, provided the taxpayer makes these deposits by Febuary 6.

Casualty Losses

Affected taxpayers have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Virginia/Earthquake” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, 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.

Please contact your PBS payroll specialist or your CPA if you any questions on these issues.