IRS Grants Tax Relief to Storm Victims

WASHINGTON - The Internal Revenue Service is granting some tax relief to individuals and businesses in the areas of several Western states that have been declared disaster areas due to recent floods.

There will be no penalty for late payment of estimated taxes -- due Jan. 15 -- if the payment is made by Jan. 22.

Employers in the affected areas will have until Feb. 18 to issue Forms W-2 to their employees. Banks and corporations have the same extension for issuing Forms 1099 for interest and dividend payments. Taxpayers have until Feb. 18 to file these four forms which are due Jan. 31:

• Form 720, Quarterly Excise Tax Return;
• Form 940, Annual Federal Unemployment Tax Return;
• Form 2290, Heavy Vehicle Use Tax;
• Form 730, Tax on Wagering.

Although the IRS cannot extend the deadline for employment tax returns or tax deposits, it will abate penalties for Forms 941, 941M, 943 and 945 filed by February 18. It will likewise abate penalties on tax deposits due between December 20 and January 31 if the deposits are made by Feb. 18. Interest charges apply to payments made after the original due date of the return and cannot be waived.

In addition to the relief above, the IRS will suspend many enforcement activities -- such as levies, seizures and summonses -- for taxpayers within the disaster areas through February 7. IRS representatives will be at disaster assistance centers to help taxpayers with returns or to expedite requests for tax account transcripts needed for disaster-related loans.

Taxpayers in disaster areas may claim uninsured casualty losses on their tax returns for either the year in which the disaster occurred or the preceding year. Claiming the loss on the prior year return enables taxpayers to get any resulting refunds sooner.

Affected taxpayers should put the words "(State name) FLOOD DISASTER" at the top of any return relying on flood-related relief.

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