IRS and FinCEN Offer Relief to Victims of Hurricane Irma
This month, Hurricane Irma ravaged parts of the United States Virgin Islands, Puerto Rico, and the State of Florida leaving in its wake a path of destruction that will take residents months if not years to recover from. In response, as part of the larger coordinated effort by the federal government to provide disaster relief, the IRS and FinCEN have announced tax and reporting relief for residents and businesses in the areas affected.
With regard to the IRS, the affected areas include the Islands of St. Thomas, St. John, and St. Croix, multiple municipalities in Puerto Rico, and 37 counties in Florida including Broward, Miami-Dade, Monroe, and Palm Beach. A complete list of affected areas can be found in the IRS’s announcements of relief here, here, and here. The IRS announced that filing and payment deadlines which commenced on September 4 in Florida and September 5 in Puerto Rico and the USVI have been extended through January 31, 2018. Such relief encompasses: 1) those taxpayers who filed valid extensions to file their 2016 returns that was due to run out on October 16, 2017; 2) quarterly estimated income tax payments originally due on September 15, 2017 and January 16, 2018; and 3) quarterly payroll and excise tax returns normally due on October 31, 2017. Additionally, the notices provide that penalties on payroll and excise tax deposits due on or after September 4 (Florida) or 5 (Puerto Rico and USVI) will be abated for fifteen (15) days so long as the deposits are made by September 19 (Florida) or September 20 (Puerto Rico and USVI).
The IRS announced that it automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area and that if a taxpayer receives a late filing or late payment penalty notice from the IRS and were entitled to relief, the taxpayer should call the number on the notice to have the penalty abated. Taxpayers should note that with regard to 2016 taxes, the relief is limited to an extension of existing extensions to file returns, not extensions to pay; therefore the due date associated with extensions for payments for 2016 tax returns is still keyed to the April 18, 2017 due date.
With regard to FinCEN, on September 12, 2017, FinCEN announced that deadline for victims in affected areas to file their FBARs for the 2016 calendar year has been extended until January 31, 2018. Generally, United States persons (which includes business entities and trusts created or formed in or under the laws of the United States), and non-U.S. persons located in and doing business within the United States, must file an annual Report of Foreign Bank and Financial Accounts (“FBAR”) disclosing the existence of all foreign financial accounts in which they hold a financial interest, or on which they hold signatory authority, if the aggregate value of the accounts exceeds $10,000 at any time during the calendar year. Without the extension, victims who are required to file an FBAR for the calendar year 2016 would have been required to do by October 15, 2017. It should be noted that at the time of its release, the scope of affected areas was slightly smaller for FBAR filing relief for Puerto Rico and Florida. However, victims in Broward, Miami-Dade, Monroe, and Palm Beach are considered affected and entitled to FBAR extension relief. A copy of FinCEN’s announcement can be read here.
Although on September 19, 2017, the IRS expanded the scope of its relief to include St. Croix and additional municipalities in Puerto Rico, as of the date of this report neither the IRS nor FinCEN have announced whether additional relief will be provided for Puerto Rico and the USVI in the wake of Hurricane Maria.
The attorneys at Fuerst Ittleman David & Joseph have extensive experience in the areas of tax regulation compliance and tax litigation. They will continue to monitor any future changes relating to tax and FBAR filing deadlines. If you have any questions, an attorney can be reached by emailing us at firstname.lastname@example.org or by calling 305.350.5690.