Massachusetts Storm Victims May Qualify for IRS Disaster Relief (MA-2011-30)

The president has declared the counties of Hampden and Worcester in Massachusetts to be a federal disaster area. These counties constitute a covered disaster area for purposes of Reg. §301.7508A-1(d)(2) and are entitled to relief. Individuals who reside or have a business in these counties may qualify for tax relief. Certain deadlines falling on or after June 1 and on or before August 8 have been postponed to August 8. This includes the estimated tax payment for the second quarter of 2011 normally due on June 15.

The IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after June 1 and on or before June 16, as long as the deposits were made by June 16.

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 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 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.

The affected taxpayers have until August 8, 2011, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns; S corporation returns; 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 June 1 and on or before August 8. The IRS also gives affected taxpayers until August 8, 2011, to perform other time-sensitive actions described in Reg. §301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388, that are due to be performed on or after June 1 and on or before August 8. This relief also includes the filing of Form 5500 series returns. The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Similarly, 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 June 1 and on or before June 16 provided the taxpayer made these deposits by June 16.

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax returns for either 2011 or 2010. Claiming the loss on an original or amended return for 2010 will get the taxpayer an earlier refund, but waiting to claim the loss on the 2011 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. Affected taxpayers claiming the disaster loss on their 2010 returns should put the disaster designation “Massachusetts/ Severe Storms and Tornadoes” at the top of the form so that the IRS can expedite the processing of the refund.

Massachusetts Disaster Relief Notice (MA 2011-30), 2011FED ¶46,398

Other References:

Code Sec. 7508A

CCH Reference – 2011FED ¶42,687C.22

Tax Research Consultant

CCH Reference – TRC FILEIND: 15,204.25

CCH Reference – TRC FILEBUS: 15,110


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