Tax Relief for Victims of Recent California Wildfires
Victims of the massive wildfires that ripped through portions of California may receive some tax relief from state and federal tax agencies. The Valley and Butte fires that erupted in September burned more than 140,000 acres and destroyed more than 2,000 homes and other structures, according to estimates.
Here’s a rundown of some of the relief that has been announced by federal and state agencies.
Federal Tax Relief from the IRS
The IRS announced that victims of the Valley and Butte fires that took place on September 12 may qualify for federal tax relief. President Obama has declared Lake and Calaveras counties a federal disaster area. Individuals who reside or have a business in these counties may be eligible for tax and other relief.
The presidential declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after September 12, and on or before January 15, 2016 have been postponed to January 15, 2016. This includes the September 15 estimated tax deadline, the 2014 corporate and partnership returns on extension thru September 15, and the October 15 deadline for those who received an extension to file their 2014 return.
In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after September 12, as long as the deposits were made by September 28, 2015.
Additional information about federal tax relief can be found by clicking here.
Note: Victims may also be eligible for assistance from the Federal Emergency Management Agency (FEMA) and other federal agencies such as the U.S. Small Business Administration (SBA). For more information, call FEMA at 800-621-3362 or the SBA at 800-659-2955. Farmers and ranchers may qualify for assistance from the U.S. Department of Agriculture. Contact your local USDA Service Center. To locate your service center, use thisUSDA tool.
Federal Casualty Losses
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 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.
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “California, Valley Fire” at the top of the form so that the IRS can expedite the processing of the refund.
Other Federal Relief
The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, “Request for Copy of Tax Return,” or Form 4506-T, “Request for Transcript of Tax Return,” as appropriate, and submit it to the IRS.
Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.
State Tax Relief
The California State Board of Equalization (SBE) announced the emergency tax relief it is making available for business owners and fee payers directly affected by the wildfires in Butte, El Dorado, Humboldt, Lake, Madera, Napa, Nevada, Sacramento, San Bernardino, San Diego, Shasta, Solano, Tulare, Tuolumne, and Yolo counties. Relief may include:
- Extending filing return dates,
- Relieving penalties and interest, and
- Replacing copies of records lost due to the wildfires.
One-Month Extension of Filing Deadlines
A one-month extension of time to file and pay taxes or fees is available for programs administered by the SBE.
This relief is available to any business owner or fee payer who was directly affected by the wildfires in the counties listed above and who, as a result, cannot meet its filing and payment deadlines. Business owners and fee payers also may request an extension if their filing was delayed by disrupted mail or freight services.
Online Request for Relief from Interest and Penalties
Relief from interest and penalties may be provided for those persons who are unable to file their returns and pay their taxes and fees when due. This relief may be provided for the SBE-administered programs. To request a filing extension or relief from interest and penalties, business owners and fee payers should contact their tax advisers or visit the Relief Request webpage on the SBE’s website.
Copies of SBE Tax Records Available
Businesses owners and fee payers who need to obtain copies of SBE tax records will be able to receive replacements free of charge. To obtain copies of critical tax records on file with the SBE, they should call the SBE at 800-400-7115. These forms may include copies of prior tax or fee returns filed with the SBE, audits, or permit applications.
Individuals and/or businesses with taxable property damaged or destroyed by the wildfires may be eligible for property tax relief. Unlike sales and use taxes and special taxes — which are collected by the state — property tax is collected at the county level.
Answers to property tax queries, claims for property tax relief, and applications for reduced assessment are available from, and must be filed with, county assessors’ offices. For a complete listing of county assessors, visit the SBE’s Listing of County Assessors webpage. Business owners and fee payers with questions should call the SBE’s Customer Service Center at 800-400-7115.
Your tax adviser can answer any questions you have about available relief and help you fill out the forms to obtain it.