Residents and Business Owners in Certain Iowa, Kansas, Nebraska and Texas Counties Qualify 

Key Takeaways:
  • The IRS has extended the deadline to Nov. 1, 2024, for individuals and businesses affected by severe storms, tornadoes, and flooding in certain counties in Iowa, Kansas, Nebraska, Texas, Arkansas and Oklahoma.
  • The relief applies to specific counties within the affected states.
  • Affected taxpayers are eligible for several forms of relief, including penalty abatement for late filings and payments, claiming disaster-related casualty losses on federal income tax returns and emergency withdrawals from retirement plans without the usual penalties.

 

The Internal Revenue Service (IRS) recently announced tax relief for individuals and businesses in four states that were affected by severe storms, tornadoes and flooding on May 2024. Taxpayers in Iowa, Kansas, Nebraska and Texas now have until Nov. 1, 2024, to file various federal individual and business tax returns and make tax payments. 

Following the disaster declaration issued by the Federal Emergency Management Agency (FEMA), individuals and households that reside or have a business in certain counties in the effected states qualify for tax relief. The counties are: 

  • Iowa: Adair, Montgomery, Polk and Story counties  
  • Kansas: The following counties have been designated as disaster areas by FEMA but not yet formally accepted as qualifying for the extended fling period as of the date of this article: Butler, Chase, Cloud, Edwards, Ford, Geary, Gray, Hodgeman, Morris, Osage, Ottawa, Pawnee, Shawnee, Stafford, Trego and Wabunsee 
  • Nebraska: Boone, Douglas, Greeley, Howard, Sherman and Washington counties  
  • Texas: Austin, Bell, Bosque, Brown, Caldwell, Calhoun, Clay, Coleman, Collin, Concho, Cooke, Coryell, Dallas, Denton, Eastland, Ellis, Falls, Freestone, Grimes, Guadalupe, Hamilton, Hardin, Harris, Henderson, Hockley, Houston, Jasper, Jones, Kaufman, Lamar, Lampasas, Lee, Leon, Liberty, Limestone, Madison, Mills, Montague, Montgomery, Navarro, Newton, Polk, Smith, San Jacinto, San Saba, Smith, Terrell, Trinity, Tyler, Van Zandt, Walker, Waller and Washington counties  
  • Arkansas: Baxter, Benton, Boone, Carroll, Fulton, Greene, Madison, Marion, Nevada, Randolph and Sharp counties
  • Oklahoma: Blaine, Caddo, Cluster, Delaware, Jackson, Mayes, Muskogee, and Rogers counties 

The disaster declaration permits the IRS to postpone certain tax-filing and tax-payment deadlines for taxpayers who reside or have a business in the disaster area. As a result, affected individuals and businesses have until Nov. 1, 2024, to file returns and pay any taxes that were originally due during this period. 

The Nov. 1, 2024, deadline also applies to any payment normally due during this period, including: 

  • Quarterly estimated tax payments due on June 17, 2024, and Sept. 16, 2024. 
  • Quarterly payroll and excise tax returns normally due on July 31, 2024, and Oct. 31, 2024.  
  • In addition, penalties on payroll and excise tax deposits due on or after May 20, 2024, and before June 4, 2024, will be abated as long as the tax deposits were made by June 4, 2024. 

If an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original filing, payment or deposit due date that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty. 

Types of Filings & Payments Affected 

The filing and payment deadline extension to Nov. 1, 2024, applies to 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 
  • Annual information returns of tax-exempt organizations 
  • Employment and certain excise tax returns 

This applies to the above with an original or extended due date occurring on or after May 20, 2024. 

This relief also includes the filing of Form 5500 series returns that were required to be filed on or after May 20, 2024, and before Nov. 1, 2024. 

The IRS automatically identifies taxpayers located in the covered disaster area and applies filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area should call the IRS disaster hotline at 866-562-5227 to request this tax relief. Disaster area tax preparers with clients located outside the disaster area can choose to use the Bulk Requests from Practitioners for Disaster Relief option, described on IRS.gov. 

What the Relief Does Not Cover 

Unless an act is specifically listed in the IRS statement of time-sensitive acts that may be postponed under Sections 7508 and 7508A of the Internal Revenue Code (Rev. Proc. 2018-58), the postponement of time to file and pay does not apply to:  

  • Information returns in the W-2, 1094, 1095, 1097, 1098 or 1099 series.  
  • Forms 1042-S, 3921, 3922 or 8027. 
  • Employment and excise tax deposits.  

However, penalties on deposits due on or after May 20, 2024, and before June 4, 2024, will be abated as long as the tax deposits were made by June 4, 2024. 

Who Qualifies for Relief 

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts include individuals who live, and businesses (including tax-exempt organizations) whose principal place of business is located, in the covered disaster area.  

Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, 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. 

Affected taxpayers that have an estimated income tax payment originally due on or after May 20, 2024, are postponed through Nov. 1, 2024, will not be subject to penalties for failure to pay estimated tax installments as long as such payments are paid on or before Nov. 1, 2024. 

Casualty Losses 

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 the year in which the event occurred, or the prior year. Taxpayers choosing to claim their losses on their 2023 return have extra time, until Oct. 15, 2025, to make this election. Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. See Publication 547 for details. Also see Form 4684, Casualties and Thefts and its instructions. Affected taxpayers claiming the disaster loss on their return should put FEMA disaster declaration number 4784-DR on any return. See Publication 547 for details. 

Additional Relief 

  • Disaster Payments Excluded from Gross Income: Qualified disaster relief payments are generally excluded from gross income. This means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525 for details. 
  • Emergency Withdrawals from Retirement Plans: Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement account (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow. 

The IRS may provide additional disaster relief in the future. 

Additional locations are still being considered for approval by the IRS with the last approval being released for Oklahoma counties on June 25.  Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so the IRS can provide appropriate consideration to their case. Taxpayers may download forms and publications from the official IRS website, IRS.gov. Contact an Adams Brown advisor with any questions.