09 October 2018 IRS, states provide disaster relief for certain taxpayers affected by Hurricane Florence In response to the significant destruction caused by Hurricane Florence in North Carolina and South Carolina, government entities throughout the US are providing various tax relief to affected individuals and businesses. Such relief includes extending tax filing deadlines, providing exemptions or suspensions from tax, and waiving certain regulatory requirements. To date, the IRS, North Carolina, South Carolina, Alabama, Alaska, Arkansas, the District of Columbia, Florida, Georgia, Idaho, Mississippi, New Jersey, Pennsylvania, Tennessee and West Virginia are among the jurisdictions providing some form of relief to those affected by Hurricane Florence. Other states may join in providing filing relief to taxpayers affected by Hurricane Florence as well. Taxpayers should note that, in some situations, they must specifically request the relief available. The IRS has extended deadlines for filing returns, paying taxes, and other time-sensitive acts for certain taxpayers affected by Hurricane Florence, applicable to deadlines (original or extended) that occurred in North Carolina on or after September 7, 2018, and before January 31, 2019, and in South Carolina on or after September 8, 2018, and before January 31, 2019.1 Extension-eligible tax returns include 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; and employment and certain excise tax returns. The extensions also apply to quarterly estimated income tax payments, the quarterly payroll and excise tax returns normally due on October 31, 2018, and tax-exempt organizations that operate on a calendar-year basis and had an automatic extension due to expire on November 15, 2018. Affected taxpayers include individuals that reside or have a business in counties designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance. As of October 8, 2018, in North Carolina, the relief provisions apply to taxpayers in the following counties: Beaufort, Bladen, Brunswick, Carteret, Columbus, Craven, Cumberland, Duplin, Greene, Harnett, Hoke, Hyde, Johnston, Jones, Lee, Lenoir, Moore, New Hanover, Onslow, Pamlico, Pender, Pitt, Richmond, Robeson, Sampson, Scotland, Wayne and Wilson counties. In South Carolina, the relief provisions apply to taxpayers in Chesterfield, Darlington, Dillon, Florence, Georgetown, Horry, Marion and Marlboro counties. If more counties are added, taxpayers located in those counties will automatically receive the same filing and payment relief. The relief also is available to those whose records necessary to meet a tax deadline are located in one of these counties, and to workers helping with relief activities who are affiliated with a recognized government or philanthropic organization. The IRS announced it would not impose a penalty when dyed diesel fuel was sold for use or used on the highway in North Carolina because of shortages of undyed diesel fuel caused by Hurricane Florence, effective as of September 17, 2018, through September 28, 2018. Additionally, certain taxpayers can claim as a qualified disaster loss personal casualty losses attributable to Hurricane Florence. The IRS automatically identifies taxpayers that are located in the disaster area and applies automatic filing and payment relief, but affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline (866-562-5227) to request tax relief. For specific information about disaster relief available for employers and the workforce, see Tax Alert 2018-1855. North Carolina enacted hurricane response legislation in early October, and is scheduled to convene for the third extra session beginning October 15, 2018, to respond to the damage caused by Hurricane Florence. In the meantime, the North Carolina Department of Revenue (NC DOR) is following federal tax relief provisions and penalties for the failure to obtain a license, file a return, and pay tax when due may not be assessed for any period in which the time for filing a federal return or report or for payment of a federal tax is extended under IRC Section 7508A because of a presidentially declared disaster, except in limited circumstances.2 The NC DOR will waive all penalties for these taxpayers.3 (The state by statute cannot waive interest, except in certain declared bankruptcies.) Taxpayers located outside of the counties declared as federal disaster areas can request a waiver of penalties for late actions (i.e., failure to obtain a license, failure to file a return, or failure to pay tax when due) that occur within three months following the natural disaster date, and must provide documentation supporting the claim that Hurricane Florence caused the late action. To do so, file Form NC-5500, Request to Waive Penalties, along with the late action. Estimated income tax payments due between September 7, 2018, and January 31, 2019, remain due on the statutory date; interest will be imposed on estimated tax not timely paid. In addition, based on a waiver from the US Department of Agriculture, the NC DOR announced that retail food stores authorized by the Food and Nutrition Service to accept Supplemental Nutrition Assistance Program (SNAP) benefits may sell hot foods to program participants who use their SNAP EBT benefits, effective September 16, 2018, through October 31, 2018, without being subject to sales tax.4 Further, retail sales of tangible personal property that are purchased with a client assistance debit card issued for disaster assistance relief by a state agency, federal agency or instrumentality (i.e., FEMA or the American Red Cross) also are exempt from North Carolina sales and use tax. Lastly, effective September 17, 2018, through September 28, 2018, North Carolina will not impose a tax penalty for dyed diesel fuel sold for use in North Carolina in highway vehicles.5 Tax relief provided by the South Carolina Department of Revenue (SC DOR) mirrors relief provided by the IRS for individuals and businesses located in counties affected by the hurricane, business taxpayers with offices in counties whose operations have been affected by the hurricane, those whose tax records are located in these counties, those whose returns are prepared by tax professionals in these counties, and relief workers.6 The SC DOR may grant additional tax relief on a case-by-case basis as it gathers more information about the needs of those affected by Hurricane Florence.7 However, South Carolina's tax relief does not apply to current collection matters, including payments due during the relief period under a previously entered payment plan with the SC DOR. To receive relief, taxpayers should first submit completed tax returns and/or payments by January 31, 2019, and then make a request for penalty waiver if they receive a notice with penalties due. A taxpayer located in the covered disaster area filing an electronic return should automatically receive the filing and payment relief. Affected taxpayers filing a paper return or who reside or have a business located outside the covered disaster area must contact the SC DOR to request tax relief.8 South Carolina also provides special registration and tax exemptions for out-of-state businesses that perform disaster work related to infrastructure that has been damaged, impaired or destroyed as a result of Hurricane Florence.9 The disaster period to which this relief applies begins within 10 days of the first day of notification by the Governor, President or Director of the SC DOR of a declared state disaster or emergency, whichever occurs first, and ends 60 days after the declared disaster period ends, or any longer period authorized by the designated state official or agency. President Trump issued an emergency disaster declaration for South Carolina on September 16, 2018, which authorized FEMA to coordinate disaster relief efforts in Hurricane Florence-affected areas beginning September 8, 2018. The relief is limited to out-of-state businesses that have been requested by a South Carolina-registered business, the state government or a local government to repair, renovate, install, build, render services or other business activities related to the following infrastructure: (1) communication networks; (2) electric generation, transmissions and distribution systems, and gas distribution systems; (3) water pipelines; (4) public roads and bridges; and (5) facilities related to these networks, systems, pipelines, roads and bridges that service multiple customers or citizens, such as buildings, offices, lines, poles, pipes, structures and equipment. An out-of-state business that performs this kind of work or services is not considered to have established a level of presence in South Carolina that would require it to register, file and remit state and local taxes or require the business or its out-of-state employees to be subject to any state licensing or registration requirement. Additionally, out-of-state employees are not considered to have established residency or a South Carolina presence that would require them or their employer to file and pay income taxes, to be subject to tax withholding, or to file and pay any other state or local tax or fee during the disaster period based on the disaster-related work. Qualifying out-of-state businesses are exempt from all state or local business licensing or registration requirements, and are not required to register, file or remit state and local taxes or fees, including unemployment insurance, state or local occupational licensing fees, sales and use tax, or property tax on equipment used or consumed during the disaster period. The SC DOR will disregard filing requirements for the activities of a qualifying out-of-state business (including a business's filing required for a unitary or combined group) for purposes of state or local tax measured by net or gross income or receipts. Out-of-state businesses must give the SC DOR a notification statement that it is in South Carolina for purposes of responding to the disaster caused by Hurricane Florence, and include the business name, state of domicile, principal business address, federal tax identification number, date of entry, and contact information. South Carolina-registered businesses should also provide this notification information for out-of-state affiliates that enter the state to perform such work, and provide the affiliate's contact information. The special registration and tax exemptions do not apply to out-of-state businesses or employees who perform disaster work (i.e., repair, renovation or building) related to any other commercial or residential property, such as mold remediation in a personal residence, or repair or rebuilding of a retail store, professional office building or residence. States outside the disaster area have started to announce tax relief for those taxpayers affected by Hurricane Florence. Those which have already made such announcements include: Alabama, Alaska, the District of Columbia, Florida (for corporate income tax filers), Idaho, Mississippi, New Jersey, and Pennsylvania (for business taxes), each of which is offering filing extensions generally consistent with the filing extensions offered by the IRS. In some cases, a taxpayer may be required to label its return with information designating it as being affected by Hurricane Florence, and should check with the state regarding specific filing requirements. Tax relief offered by the Alabama Department of Revenue mirrors relief provided by the IRS for taxpayers located in areas affected by the hurricane.10 For returns due on or after September 7, 2018, and before January 31, 2019, Alabama taxpayers residing in declared disaster areas have until January 31, 2019, to file. Others who have difficulty filing may be eligible to request a waiver of late-filing and late-payment penalties after they provide documentation that they had difficulty filing on time due to weather-related circumstances associated with Hurricane Florence. Alaska generally follows IRS guidelines on extended due dates for disaster relief victims. Hurricane Florence victims can pay their Alaska corporate income tax by the federal extended due date of January 31, 2019, and file their returns by March 2, 2019 (30 days later, since the Alaska return is due 30 days after the federal return). Additionally, estimated payments due on or after September 17, 2018, and before January 31, 2019, have an extended due date of January 31, 2019.11 The Arkansas Department of Finance and Administration temporarily waived requirements related to the International Registration Plan (IRP) and International Fuel Tax Agreement (IFTA) for motor vehicles traveling through Arkansas that are engaged in disaster relief efforts, effective September 12, 2018, through 11:59 p.m. on October 31, 2018.12 The District of Columbia Office of Tax and Revenue announced that it will follow federal filing deadlines that have been extended until January 31, 2019, for victims of Hurricane Florence.13 The relief does not apply to District of Columbia sales and use tax returns or District withholding, but does apply to extended individual, partnership, corporate and unincorporated income tax returns due October 15, 2018, extended combined report returns due November 15, 2018, and individual, corporation and unincorporated estimated tax payments. Taxpayers whose tax preparers, books or records are located in the disaster area also qualify for relief. For corporate income tax filers, the Florida Department of Revenue (FL DOR) is following the tax relief provided by the IRS on postponement of return due dates. Florida corporate income/franchise tax returns originally due, or due on extension, between September 7, 2018, and January 31, 2019, are now due February 15, 2019. In addition, the FL DOR will work with tax filers on a case-by-case basis who are unable to file returns as required by law because of Hurricane Florence, despite good-faith efforts.14 Taxpayers who require assistance should call the FL DOR to discuss their individual situations. However, filing deadlines do not change for those who are able to file. Georgia temporarily suspended the IRP and IFTA requirements related to trip and fuel permits for vehicles providing direct assistance for hurricane relief efforts, effective until 5:00 p.m. on October 8, 2018, or until completion of hurricane relief efforts, whichever comes first.15 A copy of the Georgia Department of Revenue letter regarding the temporary waiver of IRP and IFTA requirements must be present for inspection in each vehicle operating under this temporary suspension.16 The Idaho State Tax Commission announced that it is following the extended deadlines set by the IRS for taxpayers in areas designated by FEMA as qualifying for individual assistance.17 The extension applies to all Idaho tax types, including income tax, sales tax, fuels tax, and income tax withholding, for individuals and businesses in the disaster areas and those whose tax records are located there. The Mississippi Department of Revenue (MS DOR) will follow federal extensions granted to Hurricane Florence victims, giving those who reside in counties designated as federally declared disaster areas until January 31, 2018, to file individual income, corporate income and pass-through entity returns due on or after September 7, 2018.18 This relief is automatically granted, so taxpayers that reside in affected counties do not need to contact the state to receive this relief. The relief, however, does not provide an extension for payments on prior liabilities. Taxpayers in the disaster area who receive a penalty notice should contact the MS DOR to receive an abatement, and the state will work with other taxpayers who reside outside the disaster area but whose books, records or tax professionals are located in the disaster areas. New Jersey is following the federal tax relief provisions as established by the IRS for Hurricane Florence victims.19 Taxpayers affected by Hurricane Florence (including individuals and businesses located in disaster areas, those whose tax records are in disaster areas, and relief workers) have until January 31, 2019, to file their New Jersey tax returns and submit payments, including estimated payments, with original or extended due dates between September 7, 2018, and before January 31, 2019. New Jersey will follow any additional extension that the IRS may issue. The Pennsylvania Department of Revenue (PA DOR) is following the IRS tax relief, postponing the filing deadline for the Corporation Tax Report RCT-101 due on or after September 7, 2018, to January 31, 2019.20 The extension does not apply to Specialty Tax return filings or payment. The state provides a schedule of due dates for impacted tax periods, and to avoid a late filing penalty assessment the PA DOR requires taxpayers to email the request on company letterhead that includes the business name and the address where its tax records are located, signed by a corporation official. Pennsylvania also extended the filing deadline to January 31, 2019, for Pennsylvania S Corporation/Partnership Information Return PA-20S/PA-65 for S corporations and partnerships directly impacted by Hurricane Florence in parts of North Carolina. Qualifying taxpayers affected by Hurricane Florence can request a filing extension from the Tennessee Department of Revenue (TN DOR), and the state will work with them on a case-by-case basis.21 Taxpayers who receive an extension to file will not be assessed a penalty for payments made on or before the payment due date, but interest will apply. Extension requests should be made in writing and should include the business name, either the entity ID or Tennessee account number, how much time for an extension is being requested, and an explanation for why an extension is necessary. These requests should be made before the return's due date if possible. The TN DOR also has suspended IRP and IFTA requirements for any motor vehicles engaged in interstate disaster relief efforts, effective September 12, 2018, through October 12, 2018.22 Taxpayers who reside in, and businesses whose principal place of business is located within, the area affected by Hurricane Florence can apply for extensions of time to file and pay income and business taxes.23 The applications were due September 30, 2018, to be eligible for relief, using Form EXD-B, Disaster Relief Extension — Business Taxes and/or Form EXD-P, Disaster Relief Extension — Personal Income Tax. Additionally, the West Virginia Governor issued an executive order providing relief from the IRP and IFTA requirements on those who transport relief supplies, such as food, water, medicine, emergency medical or fire services, petroleum, petroleum products and other commodities.24 This relief is available to any utility vehicle responding to affected areas in response to power restoration, emergency or fire services and debris removal. Additionally, the state waived the size and weight restrictions for loads on any vehicles transporting emergency equipment, services, supplies and agricultural commodities. Lastly, West Virginia is providing relief for casualty losses on products subject to excise tax. For most situations (i.e., wine, beer and soda), the casualty loss can be accounted for by adjusting the return in the indicated lines for either casualty loss, breakage, spoilage, etc. For tobacco products, a taxpayer must file a refund claim (Form TPT-722) with the tobacco destruction affidavit (Form TPT-723). As the recovery process from Hurricane Florence continues, it is anticipated that other states will offer relief to affected individuals and businesses. States that do not announce general relief may provide relief on a case-by-case basis. Employers should be aware that tax-favored benefits are available to the workforce in those areas with emergency and/or major disaster declarations. For more information, see Tax Alert 2018-1855 from Employment Tax Advisory Services.
1 A compilation of federal tax relief is available at the IRS Help for Victims of Hurricane Florence page. 2 NC Dept. of Rev., Important Notice: List of Counties Eligible for Hurricane Florence Tax Relief Revised to Add Additional Counties (Oct. 1, 2018); NC Dept. of Rev., Important Notice: Tax Relief for Victims of Hurricane Florence (Sept. 17, 2018). 3 NC Dept. of Rev., Important Notice: Tax Relief for Victims of Hurricane Florence (Sept. 17, 2018). 4 NC Dept. of Rev., Important Notice: Disaster Assistance Sales and Use Tax Exemptions (Sept. 20, 2018). 5 NC Dept. of Rev., Important Notice: NC DOR Waives Diesel Fuel Penalty Due to Hurricane Florence (Sept. 18, 2018). 6 SC Dept. of Rev., SC Info. Letter No. 18-13 (Oct. 2, 2018). 7 SC Dept. of Rev., Tax Relief for Hurricane Florence (Sept. 19, 2018). 8 SC Dept. of Rev., SC Info. Letter No. 18-13 (Oct. 2, 2018). 9 SC Dept. of Rev., SC Info. Letter No. 18-14 (Oct. 3, 2018). 10 Ala. Dept. of Rev., ADOR Providing Tax Relief to Victims of Hurricane Florence (Sept. 17, 2018). 11 Alaska Dept. of Rev., Corporate Income Tax Frequently Asked Questions (Sept. 2018). 12 Ark. Dept. of Fin. and Admin., Waiver of IRP and IFTA Requirements Due to Hurricane Florence (Sept. 12, 2018). 13 DC Office of Tax and Rev., OTR Tax Notice 2018-03 Tax Relief for Victims of Hurricane Florence (Sept. 25, 2018). 14 Fla. Dept. of Rev., Hurricane Florence Tax Relief (Sept. 2018). 15 Ga. Dept. of Rev., Dept. of Rev. to Waive IRP/IFTA Requirements Due to Hurricane Florence (Sept. 13, 2018). 17 Idaho State Tax Comn., Idaho grants tax relief to victims of Hurricane Florence (Sept. 19, 2018). 18 Miss. Dept. of Rev., Notice 80-18-001: Mississippi Relief to Hurricane Florence Victims (Sept. 20, 2018). 19 NJ Div. of Taxn., NJ Tax Relief for Hurricane Florence Victims (Sept. 25, 2018). 20 Pa. Dept. of Rev., Hurricane Florence — Additional Extension of Time to File (Sept. 2018); Pa. Dept. of Rev., Tax Update (Aug./Sept. 2018). 21 Tenn. Dept. of Rev., Notice No. 17-19 (Sept. 2017). 22 Tenn. Dept. of Rev., Suspension of IRP and IFTA Requirements Due to Hurricane Florence (Sept. 12, 2018). 23 W. Va. State Tax Dept., 2018 Hurricane Florence Relief Info. (Sept. 20, 2018). 24 W. Va. Exec. Dept., Exec. Order No. 19-18 (Sept. 19, 2018). Document ID: 2018-1996 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
