Victims of severe storms, tornadoes and associated flooding beginning April 23, 2011 in parts of Arkansas may qualify for tax relief from the Internal Revenue Service.
The President has declared the following counties a federal disaster area: Benton, Boone, Clay, Crittenden, Faulkner, Garland, Jefferson, Lincoln, Madison, Montgomery, Phillips, Pulaski, Randolph, Saline, Washington, and White counties. Individuals who reside or have a business in these counties may qualify for tax relief.
The 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 April 23 and on or before June 30 have been postponed to June 30.
In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after April 23 and on or before May 9, 2011, as long as the deposits were made by May 9, 2011.
Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return 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. For details, see Form 4684 and its instructions.
Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation “Arkansas/Severe Storms, Tornadoes, and Associated Flooding” at the top of the form so that the IRS can expedite the processing of the refund.
Other 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.
