As a result of the devastation wrought by Hurricanes Harvey and Irma, the following counties have been declared as major disaster areas, all of which are entitled to federal tax filing and payment relief:

In Texas: Aransas, Austin, Bastrop, Bee, Brazoria, Calhoun, Chambers, Colorado, DeWitt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Hardin, Harris, Jackson, Jasper, Jefferson, Karnes, Kleberg, Lavaca, Lee, Liberty, Matagorda, Montgomery, Newton, Nueces, Orange, Polk, Refugio, Sabine, San Jacinto, San Patricio, Tyler, Victoria, Walker, Waller and Wharton Counties.

In Florida: Broward, Charlotte, Clay, Collier, Duval, Flagler, Hillsborough, Lee, Manatee, Miami-Dade, Monroe, Palm Beach, Pinellas, Putnam, Sarasota and St. Johns Counties.

Taxpayers whose principal residence or a business’ principal place of business was located in one of the counties declared as a major disaster area are entitled to certain federal tax relief for the 2016 tax year. This federal tax relief includes: (a) the suspension of certain deadlines to file tax returns; (b) the suspension of certain deadlines to pay taxes; and (c) the ability to claim casualty losses incurred as a result of Hurricanes Harvey and Irma.

Continue Reading IRS Provides Tax Filing and Payment Relief to Hurricane Victims

On October 3, 2016, under Notice 2016-55, the IRS will announce that employees won’t be taxed when they forgo vacation, sick, or personal leave in exchange for employer contributions of amounts to Section 170(c) charitable organizations providing relief to Louisiana storm victims. Notice 2016-55 will also provide that employers may deduct the amounts contributed as business expenses.

Leave-based donations. Some employers have set up or may be considering setting up programs where employees can donate their vacation, sick, or personal leave in exchange for the employer making cash payments to qualified tax-exempt organizations that provide relief for the victims of the August 2016 Louisiana storms.

Tax treatment. In Notice 2016-55, the IRS will announce that it will not assert that cash payments an employer makes to Section 170(c) organizations in exchange for vacation, sick, or personal leave that its employees elect to forgo, constitute gross income or wages of the employees, if the payments are:

  1. Made to the Section 170(c) organizations for the relief of victims of the Louisiana storms; and
  2. Paid to the Section 170(c) organizations before January 1, 2018. Nor will giving employees the choice to participate cause employees to be considered in constructive receipt of income.

It should be noted that employees who participate in a leave-sharing donation program won’t be allowed to claim a charitable contribution deduction for the value of forgone leave excluded from compensation and wages.

As for employers, the IRS has provided that it won’t assert that payments made under a leave-sharing donation program are deductible as charitable contributions under Section 170, rather than as business expenses under Section 162.

Finally, it should be noted that a written disaster leave-sharing plan is required in order to take advantage of the above-referenced IRS leave-sharing pronouncements. Specifically, a list of enumerated requirements must be met in order to be subject to the above-enumerated IRS leave-sharing program.

On August 14, 2016, President Obama declared several parishes in southern Louisiana major disaster areas because of the severe storms and flooding that occurred. These parishes included Acadia, Ascension, Avoyelles, East Baton Rouge, East Feliciana, Evangeline, Iberia, Iberville, Jefferson Davis, Lafayette, Livingston, Pointe Coupee, St. Helena, St. James, St. Landry, St. Martin, St. Tammany, Tangipahoa, Vermilion, Washington, West Baton Rouge, and West Feliciana.

If your principal residence is located in one of these parishes or your business’ principal place of business is located in one of these parishes, the designation of these parishes as a federally declared disaster area provides you with certain federal tax relief. This federal tax relief includes not only the suspension of certain deadlines to file tax returns or pay taxes, but also the ability to claim casualty losses incurred in the flooding on 2015 tax returns. Continue Reading Federal Tax Return Filing and Payment Relief

On August 14, 2016, President Obama declared a major disaster in the State of Louisiana due to the severe storms and flooding that took place in several State parishes (“Louisiana Storms”). Following the declaration, the Internal Revenue Service (IRS) issued guidance postponing certain tax filings and payment deadlines for taxpayers who reside or work in the disaster area. The relief also provides qualifying individuals with expanded access to their retirement plan assets to alleviate hardships caused by the Louisiana Storms. Below is a summary of the filing extension for the Form 5500 series and administrative changes that employers can make to expedite plan loans and hardship distributions to Louisiana Storm victims.

Extension of Filing Deadlines 
Plan sponsors in the affected parishes listed below now have until January 17, 2017, to file Form 5500 series returns, provided the return had an original or extended due date falling on or after August 11, 2016, and before January 17, 2017.

Continue Reading IRS Provides Benefit Plan Relief to Louisiana Flood Victims