IRS Offers Relief to Taxpayers Affected by Hurricane Lee

AAFCPAs and AAF Wealth Management would like to make clients aware that the IRS has offered tax relief for businesses and individuals affected by Hurricane Lee. Taxpayers in all 16 counties in Maine and all 14 counties in Massachusetts automatically qualify for relief as part of a coordinated federal response.

Affected taxpayers now have until February 15, 2024 to file returns and make payments that were originally due between September 15, 2023 and February 15, 2024, referred to as the postponement period. The IRS will waive penalties as well for excise and payroll tax deposits due on or after September 15 and before October 2, 2023, given deposits are made by October 2, 2023.

This extension covers filings for most returns including corporate, estate and trust, partnership and S corporation, Form 5500 series returns, annual information returns of tax-exempt organizations, individual tax returns, and employment and certain excise tax returns. Excluded are information returns in the Form W-2, 1094, 1095, 1097, 1098, 1099 series and Forms 1042-S, 3921, 3922, and 8027.

As of this date, neither the Massachusetts nor Maine taxing authorities have announced their intention to provide a similar extension. Moreover, it is unclear as to whether Massachusetts and Maine taxpayers that also file tax returns in other states will receive additional time to file returns due on these dates.

The IRS is working with taxpayers who live outside of the disaster area but have records necessary to meet a deadline during the postponement period within the affected area. This includes workers affiliated with a recognized philanthropic or government organization.

Taxpayers incurring uninsured or unreimbursed disaster-related losses in a federally declared disaster area may claim those losses during the year the loss occurred or on the prior year’s return. A taxpayer may make that election up to six months after their federal income tax return due date for the disaster year without the need to file an extension. When using this extension, the IRS has asked that taxpayers write the FEMA declaration number—3598-EM for Maine or 3599-EM for Massachusetts—on any return claiming a loss.

Note that qualified disaster relief payments, such as funds received from a government agency to cover home repair or property replacement, are generally excluded from gross income. Taxpayers participating in a retirement plan or IRA may qualify for additional relief, e.g., eligibility for special disaster distributions or hardship withdrawals that are not subject to early distribution tax. Rules may vary based on a participant’s plan.

If you have questions, please contact Richard Weiner, CPA, MST, CM&AA, Tax Partner at 774.512.4078 or—or your AAFCPAs Partner.

About the Author

Rich has over 30 years of broad tax experience with a specialty in tax planning and consulting for private and publicly-held businesses. Rich has specific expertise in the Software, Bio-Technology, Medical Device, Life Science, Manufacturing, Retail, Professional Service and Publishing industries, as well as U.S. aspects of international taxation. He works extensively with European companies expanding into the U.S. market. Additional areas of focus include companies and stockholders in transition, including structuring of and planning for Mergers & Acquisitions, planning for changes in ownership and management, and adoption of tax methodologies with a view toward the long term. He is well known in his field and is a frequent speaker on a variety of tax related topics.