In a series of letters this week, the IRS announced three types of tax relief for victims of Hurricane Irma who are from Florida, Puerto Rico or the U.S. Virgin Islands. These are filing extensions, hardship loans from qualified retirement plans and leave donation programs. The IRS actions are similar to steps taken recently to help victims of Hurricane Harvey.
IRS Commissioner John Koskinen stated, "This has been a devastating storm for the southeastern part of the country, and the IRS will move quickly to provide tax relief for victims, just as we did following Hurricane Harvey. The IRS will continue to closely monitor the storm's aftermath, and we anticipate providing additional relief for other affected areas in the near future."
In IR-2017-150 the filing deadlines for taxpayers with extensions to October 16 are changed to January 31, 2018. Various tax deadlines for quarterly estimated tax payments and certain business tax returns are also extended.
Taxpayers may search for "Disaster Relief" on www.irs.gov or call 1-866-362-5227 for assistance.
In IR-2017-151 and Announcement 2017-13 the Service announced streamlined procedures for loans from 401(k), nonprofit 403(b) or government 457(b) plans. Plan administrators can permit loans up to the legal limits for victims in federally-designated disaster areas.
Even if the plan has not been amended to permit these hardship loans, the IRS will permit distributions for food and shelter needs. However, hardship distributions are still taxable and may also subject recipients under age 59½ to a 10% early withdrawal tax.
Finally, Notice 2017-52 enables employers to accept gifts of leave to provide Hurricane Irma and Hurricane Harvey charitable relief. Employees may have unused vacation, sick or personal leave days. An employee may give these days back to the employer. There is no deduction or taxable income for the employee.
By January 1, 2019, the employer must give the cash value of the donated days to a Sec. 170(c) organization. The gifts must be designated for relief of Hurricane Irma or Hurricane Harvey victims. Payments by the corporations are deductible either under Sec. 170(c) as charitable gifts or under Sec. 162 as ordinary and necessary business expenses.