Overview
Today, the IRS provided a recap of the relief provisions that have been made available to victims of Hurricanes Harvey, Irma, and Maria located anywhere in Florida, Georgia, Puerto Rico, and the Virgin Islands, as well as in parts of Texas. Tax-exempt organizations in disaster areas, like individuals and businesses, will have until January 31, 2018 to file any returns and pay any taxes due after the date of the hurricane, including quarterly payroll and excise tax returns originally due on October 31, 2017. The IRS is also waiving late-deposit penalties for federal payroll and excise tax deposits that were due during the first 15 days of the disaster period. Tax-exempt organizations in disaster areas whose 2016 extensions for filing Form 990 expire on November 15, 2017 will also have until January 31, 2018 to file.
The IRS has issued guidance to assist with hurricane relief, including:
- Encouraging cash contributions to disaster assistance charities by December 31. Employers may sponsor leave-based donation programs, under which employees may forgo their vacation, sick, or personal leave in exchange for cash payments made by the employer this year to charities providing aid to hurricane victims. The donated leave need not be included in the employee’s income, and employers may deduct these cash payments to charities as a business expense without limitation. See Notice 2017-48, Notice 2017-52.
- Allowing hardship withdrawals from retirement accounts by January 31, 2018. 401(k), 403(b), and similar employer-sponsored retirement plans may allow hurricane victims to take hardship distributions or borrow up to the specified statutory limits. Also, a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent, or dependent who lived or worked in the disaster area. These loans or hardship withdrawals must be made by January 31, 2018.
- Providing appropriate consideration to affected taxpayers. Individuals and organizations in disaster areas who are contacted by the IRS regarding a collection or examination matter should explain to the agent how the disaster has affected them so that appropriate consideration can be given.
The IRS has not issued specific guidance regarding expedited processing of applications for tax-exempt status. However, new organizations created to help with disaster relief efforts can use the procedures in Revenue Procedure 2017-5 to request expedited processing of determination letters.