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November 7

Flood victims can get breaks

Extended deadlines and deductions among relief efforts available for those impacted by storms.

By Steve Mocarsky smocarsky@timesleader.com
Staff Writer
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Taxpayers impacted by tropical storms Lee and Irene are entitled to certain forms of tax relief if they if they live, work or have a business in counties designated as federal disaster areas, according to federal officials.

Luzerne and Wyoming counties are among 29 in Pennsylvania that received disaster declarations for the storms.

The Internal Revenue Service and the Pennsylvania Department of Revenue had already extended deadlines for tax filings and payments due in September, such as liquid fuel tax, inheritance tax and estimated income tax, to Oct. 31.

Federal Emergency Management Agency spokesman Mike Sweet said flood victims also may deduct personal property losses that are not covered by insurance or other reimbursements, such as individual assistance grants from FEMA, when filing their federal income taxes.

Taxpayers should refer to IRS Form 4684 and its instructions for more detailed information.

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year (2011) or last year (2010).

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, according to the IRS.

The IRS automatically identifies taxpayers located in disaster areas and applies filing and payment relief. Taxpayers not in a designated disaster area, but whose books, records or tax professionals’ offices are in a designated disaster area, also are entitled to relief, said FEMA Federal Coordinating Officer Thomas J. McCool.

McCool advises taxpayers who think they may be eligible for disaster tax relief to call the IRS.

“Since tax issues are specific to individuals and business owners, we recommend that people living in the designated areas contact the IRS if they did not receive the IRS computer generated notice,” McCool said.

Affected taxpayers claiming a disaster loss on their 2010 return should put the disaster designation “Pennsylvania/Hurricane Irene and/or Tropical Storm Lee” at the top of the form so the IRS can expedite processing the refund.

The IRS also will waive the usual fees and expedite requests for copies of previously filed tax returns for flood victims. Taxpayers should print 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.

Disaster victims who are contacted by the IRS on a collection or audit matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

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