Victims of the severe storms, tornadoes, straight-line winds and flooding that took place beginning on May 4, 2015, in parts of Texas may qualify for tax relief from the Internal Revenue Service.

The IRS announced that many affected taxpayers in Texas will receive tax relief. The President has declared Harris, Hayes and Van Zandt counties federal disaster areas. In addition, the U.S. Department of Homeland Security’s Federal Emergency Management Agency (FEMA) announced that federal disaster aid has been made available to the State of Texas and ordered federal aid to supplement recovery efforts

IRS relief may be available for Individuals who reside in or have businesses whose principal place of business is located in the federally declared disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a specified deadline are in the covered disaster area, may also be entitled to relief.

In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the affected areas and any individual visiting the area who was killed or injured as a result of the disaster is entitled to relief.

Filing Extensions

The IRS postponed certain deadlines for taxpayers who reside or have a business in the federally declared disaster areas. Certain deadlines falling on or after May 4, and on or before Nov. 2, have been postponed to Nov. 2, 2015.

This includes the May 15 deadline for many tax-exempt organizations to file their annual Form 990. It also includes the June 15 and Sept.15 deadlines for making quarterly estimated tax payments. A variety of business tax deadlines are also affected, including the July 31 deadline for quarterly payroll and excise tax returns. In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after May 4, as long as the deposits were made by May 19, 2015.

IRS gives affected taxpayers until Nov. 2 to file 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; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after May 4 and on or before Nov. 2.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098 or 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns, however, can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after May 4 and on or before May 19, provided the taxpayer made these deposits by May 19, 2015.

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 this year or last year. 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. Individuals may deduct personal property losses that are not covered by insurance or other reimbursements.

For additional information, see the IRS’s Disaster Resource Guide, and contact our Houston CPA firm.