Hurricane Irene hit the tri-state area last week and left a trail of damage in her wake that included flooding, loss of power, and significant property damage.  In response to Hurricane Irene, the IRS, New York, New Jersey and Connecticut announced that certain relief is available to taxpayers and preparers affected by the hurricane.

For Clients: 

Taxpayers in certain areas in the tri-state affected by Hurricane Irene have until October 31st to file certain returns and make payments normally due before then.  The areas eligible for relief include parts of New Jersey, New York, and Connecticut.  New York, New Jersey, and Connecticut are following the relief outlined in this news blast for filing their respective state taxes also.  The IRS expects to provide similar relief to other places, after more damage assessments and federal disaster area declarations by the Federal Emergency Management Agency.

1.  Who the Relief Applies To

The relief applies to individuals who reside in and businesses located in the following local counties and municipalities currently:

- New Jersey:  All of New Jersey. 

- New York:  Albany, Clinton, Delaware, Dutchess, Essex, Greene, Montgomery, Nassau, Orange, Otsego, Rensselaer, Rockland, Saratoga, Schenectady, Schoharie, Sullivan, Suffolk, Ulster, Warren and Westchester counties.

- Connecticut:  Fairfield, Hartford, Litchfield, Middlesex, New Haven, New London, Tolland and Windham counties.

2.  The Specific Relief

Clients in the above-affected areas with a September 15th automatic extension filing date for 2010 tax returns of C corporations, S corporations, Trusts and partnerships, as well as the October 17th extension filing date for individual taxpayers and electing large partnerships, have until October 31, 2011 to file their returns.  Additionally, the October 31, 2011 postponement also applies to the third quarter payment due date for the 2011 estimated tax of individuals and corporations, otherwise due September 15th, 2011.

The takeaway - DDK clients in the above-noted counties have until October 31, 2011 to file their returns and make third quarter estimated payments.

This postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027.  These include New York, New Jersey and Connecticut withholding and New York MCMT taxes.  Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause.  Likewise, the postponement does not apply to employment and excise tax deposits.  The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Aug. 26 and on or before September 12th provided the taxpayer makes these deposits by September 12, 2011.  Connecticut taxes due from August 31, 2011 through September 13, 2011 must now be mailed and postmarked by midnight on September 13, 2011, and payments via electronic funds transfer must be started by 4:30 p.m. on September 12th to be considered timely.

3.  How the Relief is Applied

Taxpayers in the affected areas should be identified by the IRS, which will apply the relief automatically.  However, if you are in an affected area and receive a penalty notice in error, you may call the IRS at the number on the notice to obtain abatement.  In addition, the IRS advised that affected taxpayers who reside or have a business outside the covered area may request relief by calling the IRS disaster hotline at 1-866-562-5227.

For Tax Return Preparers:

The IRS also granted taxpayers whose preparers were affected by Hurricane Irene until September 22nd to file returns normally due September 15th.  The September 15th tax return due date is extended to September 22nd for taxpayers whose return preparer is located in an area that was under an evacuation order or a severe weather warning because of Hurricane Irene.  This encompasses a larger area than the federally declared disaster areas.  This relief, which primarily applies to corporations, partnerships and trusts that previously obtained a filing extension, is available to  taxpayers regardless of their location.  This relief does not apply to any tax payment requirements and is in addition to the filing and payment relief noted above.   

The September 15th deadline applies primarily to 2010 corporate, partnership and trust returns on extension.  The relief applies to the filing deadline; the tax payment requirements are not postponed.