Hurricane Florence made landfall on September 14, 2018, causing flooding, landslides and other damage along the eastern section of the country, most significantly in North Carolina.

Ahead of the storm, President Trump made emergency declarations for North Carolina, South Carolina and Virginia to assist states with evacuation efforts and other hurricane preparation procedures.

On September 14, 2018, a major disaster declaration for both personal and individual assistance was issued for North Carolina for the counties of Beaufort, Bladen, Brunswick, Carteret, Columbus, Craven, Cumberland, Duplin, Harnett, Jones, Lenoir, New Hanover, Onslow, Pamlico, Pender, Robeson, Sampson and Wayne.

As a result of these Presidential declarations, certain tax-favored disaster benefits are available to employees who were affected by Hurricane Florence including disaster relief payments under IRC Section 139 and, for employees within the designated North Carolina counties, leave sharing. Additionally, tax-exempt charities may provide assistance to qualified victims in those states where the President made emergency declarations.

The IRS may grant added relief for qualified retirement plans and leave-based donations for major disaster areas eligible for both personal and individual assistance; however, at the time of this alert that guidance was not yet issued for the designated areas within North Carolina.

For more information about disaster relief benefits available to the workforce see our special report.

Relief for North Carolina employees displaced by Hurricane Florence

On September 18, 2018, the North Carolina Department of Employment Security announced that workers in the qualified areas who became unemployed as a direct result of Hurricane Florence may be eligible for unemployment insurance benefits under the state's disaster unemployment assistance (DUA) program. Certain business owners affected by the storm may also qualify for benefits.

Workers or business owners meeting the following criteria may be eligible for DUA benefits:

• Individuals who are unemployed due to the disaster, and do not qualify for regular unemployment insurance benefits
• Self-employed individuals and small business owners who lost income due to the disaster
• Individuals who were prevented from working due to an injury caused by the disaster
• Individuals who have become the major supplier of household income due to the disaster-related death of the previous major supplier of household income
• Individuals who are unable to reach their jobs or self-employment locations, because they must travel through the affected area and are prevented from doing so by the disaster
• Individuals who were to commence employment or self-employment, but were prevented from doing so by the disaster

Individuals from the qualified counties who are affected by the disaster, and are unable to continue working, must file an ap­plication for benefits by October 18, 2018.

More information is available here.

IRS disaster relief for employment tax returns and deposits

The IRS announced In NC-2018-03 that employers having a business in the North Carolina counties of Beaufort, Bladen, Brunswick, Carteret, Columbus, Craven, Cumberland, Duplin, Harnett, Lenoir, Jones, New Hanover, Onslow, Pamlico, Pender, Robeson, Sampson, and Wayne may qualify for employment tax relief.

Specifically, taxpayers subject to certain deadlines falling on or after September 7, 2018 and before Jan. 31, 2019, are granted additional time to file through January 31, 2019. This includes quarterly payroll and excise tax returns normally due on October 31, 2018.

In addition, penalties on payroll and excise tax deposits due on or after September 7, 2018, and before September 24, 2018, will be abated as long as the deposits are made by September 24, 2018.

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

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected business located outside the covered disaster area must call the IRS disaster hotline at +1 866-562-5227 to request this tax relief.

North Carolina relief for employment tax returns and deposits

The North Carolina Department of Revenue issued a notice on September 17, 2018, announcing that with certain exceptions it will waive any penalties assessed against affected taxpayers for any late action occurring on or after September 7, 2018, through January 31, 2019, if the return is filed, or the tax is paid by January 31, 2019. This relief applies to the disaster counties listed by the IRS in NC-2018-03.

The waiver will be considered a waiver for automatic reasons and will not be considered as a waiver for good compliance, which can only be granted once every three years per tax type.

North Carolina's waiver of penalties for failure to file or failure to pay will apply to all quarterly, monthly, and semiweekly filers who are affected taxpayers that file withholding returns and pay the tax due by January 31, 2019, except those who remit an average of $20,000 per month in withholding tax and are required to pay electronically. Affected taxpayers who remit an average of $20,000 per month in withholding tax and are required to pay electronically will receive a waiver of the penalty for failure to pay the tax when due for any tax due on or after September 7, 2018 and before September 24, 2018 if the tax is paid on or before September 24, 2018.

Affected Taxpayers who remit an average of $20,000 per month in withholding tax and are required to pay electronically but who cannot pay the tax by September 24, 2018, as well as non-affected taxpayers, can request waiver of the penalty for failure to pay the tax when due for withholding tax due within three (3) months following the date of the natural disaster in keeping with the Department's Penalty Waiver Policy.

Any affected or non-affected taxpayer who cannot meet its filing or payment requirements as a result of Hurricane Florence should mail Form NC-5500, Request to Waive Penalties (NC-5500), with the late action item to the Department. The affected and non-affected taxpayer should write "Hurricane Florence" on the top of the late action item and the NC-5500.

All taxpayers requesting waiver of the penalties as a result of Hurricane Florence should place an "X" in the block beside "natural disaster" on the NC-5500 and provide all of the required information. An affected or non-affected taxpayer that does not have access to this form can attach a letter explaining the reason for the late action.

The letter should contain the taxpayer's name, address, Social Security Number (SSN) or federal employer identification number (FEIN), account ID, tax type, tax period and name of disaster county. If the NC-5500 is not sent with the late action item or if the application, return, or payment is submitted to the Department electronically, the NC-5500 or a letter containing the required information can be submitted later if the taxpayer is assessed a penalty.

The NC-5500 or letter should be mailed to the North Carolina Department of Revenue, Customer Service, PO Box 1168, Raleigh, NC 27602.

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