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The IRS has announced (IR-2023-33) that taxpayers located in certain disaster areas in Alabama, California and Georgia may file various federal individual, business and tax-exempt organization returns and make tax payments as late as October 16, 2023, further postponing a prior May 15, 2023 postponed deadline for these areas. This relief is being provided to taxpayers in any area designated by the Federal Emergency Management Agency (FEMA) in the three states.

Extension details

This IRS relief applies to four eligible FEMA declarations, each with a unique start date and other details. (See the IRS's Tax Relief in Disaster Situations page on IRS.gov.) The October 16, 2023 due date applies for most calendar-year 2022 individual and business returns, including: individual returns originally due April 18, 2023; various business returns normally due March 15 and April 18; and tax-exempt organization returns normally due May 15.

The postponement to October 16, 2023, also provides more time for:

• Individuals to make 2022 contributions to their individual retirement accounts and health savings accounts
• Farmers to file their 2022 return and pay tax, if they elected not to make estimated tax payments by March 1, 2023
• Taxpayers to pay fourth quarter 2022 estimated tax payments originally due on January 17, 2023
• Taxpayers to pay 2023 estimated tax payments originally due on April 18, June 15 and September 15, 2023
• Taxpayers to file quarterly payroll and excise tax returns normally due on January 31, April 30 and July 31, 2023

The IRS recommends reviewing its Disaster Assistance and Emergency Relief for Individuals and Businesses page for "details on other returns, payments and tax-related actions qualifying for the additional time." For taxpayers located in a designated disaster area, according to IRS records, there is no need to file paperwork or to contact the IRS to obtain relief, the IRS emphasizes.

Taxpayers who qualify for relief but live outside the disaster area (e.g., those whose tax records were in the disaster area or who are relief workers helping in the disaster zone) must contact the IRS at 866-562-5227 to obtain relief.

The IRS has also granted penalty abatement in instances where affected taxpayers receive a late filing or late payment penalty notice for extended filings, payments or deposits due during the postponement period. In such cases, taxpayers should contact the number provided on the notice to have the penalties abated.

Finally, the IRS cites "Publication 547, Casualties, Disasters, and Thefts" in noting that taxpayers who suffered uninsured or unreimbursed disaster-related losses may claim loss deductions on their returns filed for either the year of the loss or the prior year.

Implications

Taxpayers qualifying for relief have significant additional time to file many tax returns and to make required payments. There are filings and payments that are not postponed, so practitioners and taxpayers should review the relevant IRS announcements.

Though organizations and individuals located in the affected areas according to IRS records will receive automatic extensions, those who may be entitled to an extension of time should visit the IRS and FEMA websites to confirm. Taxpayers taking advantage of the extensions should ensure that their course of action is properly documented and that any calculated tax payments include the estimated tax payments originally due January 17, 2023.

Please contact your Ernst & Young tax professional with any questions.

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Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor