Hurricane Lee made a dramatic impact in the northeastern part of the United States earlier this year, the third major hurricane of the 2023 Atlantic hurricane season. Now, the IRS has announced tax relief for individuals and businesses affected by the storm in Maine and Massachusetts.
The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA).
That means that all individuals and households affected by Hurricane Lee that reside or have a business in Androscoggin, Aroostook, Cumberland, Franklin, Hancock, Kennebec, Knox, Lincoln, Oxford, Penobscot, Piscataquis, Sagadahoc, Somerset, Waldo, Washington, and York counties in Maine qualify for tax relief.
It also means that all individuals and households affected by Hurricane Lee that reside or have a business in Barnstable, Berkshire, Bristol, Dukes, Essex, Franklin, Hampden, Hampshire, Middlesex, Nantucket, Norfolk, Plymouth, Suffolk, and Worcester counties in Massachusetts qualify for tax relief.
The current list of eligible localities is always available on the disaster relief page on IRS.gov.
Filing and Payment Relief
The tax relief postpones various tax filing and payment deadlines from Sept. 15, 2023, through Feb. 15, 2024. The result is that affected individuals and businesses will have until Feb. 15, 2024, to file returns and pay any taxes that were originally due during this period.
The new Feb. 15, 2024, deadline applies to individuals with a valid extension to file their 2022 return through Oct. 16, 2023. However, since tax payments for 2022 tax returns were due on April 18, 2023, those payments are not eligible for this relief. This means that the IRS is granting taxpayers more time to file, but not to pay.
However, the IRS is granting more time for individual taxpayers to pay for quarterly estimated income tax payments normally due on Sept. 15, 2023, and Jan. 16, 2024.
Businesses are also entitled to relief. That includes businesses that normally file quarterly payroll and excise tax returns on Oct. 31, 2023, and Jan. 31, 2024. In addition, penalties for failing to make payroll and excise tax deposits due on or after Sept. 15, 2023, and before Oct. 2, 2023, will be abated as long as the deposits are made by Oct. 2, 2023.
The IRS is also granting more time to calendar-year partnerships and S corporations with valid extensions through Sept. 15, 2023, and calendar-year corporations with extensions through Oct. 16, 2023.
Tax-exempt organizations get a break, too. Calendar-year tax-exempt organizations with valid extensions through Nov. 15, 2023, are entitled to relief.
How To Get Relief
Most taxpayers won’t need to do anything to get relief. The IRS automatically provides filing and penalty relief to taxpayers with an IRS address of record in the disaster area.
It is possible an affected taxpayer may not have an IRS address of record located in the disaster area—maybe you’ve moved, for example. If you’re entitled to relief, but receive a late filing or payment penalty notice from the IRS, you should call the number on the notice to have the penalty abated.
The IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area—this also includes relief workers affiliated with a recognized government or philanthropic organization. Those taxpayers need to contact the IRS at 1.866.562.5227.
Casualty Loss Deductions
As a result of the Tax Cuts and Jobs Act, casualty loss deductions are not available for most taxpayers. However, individuals and businesses who are in a federally declared disaster area are entitled to the deduction.
You can claim a casualty loss deduction on either the return for the year the loss occurred—that’s the 2023 return filed in 2024 for losses due to Hurricane Lee—or the return for the prior year—that’s the 2022 return normally filed in 2023. Taxpayers have up to six months after the due date of their income tax return for the disaster year (without regard to any extension of time to file) to make the election.
Write the FEMA declaration number (3598-EM for Maine or 3599-EM for Massachusetts) on any return claiming a loss.
Qualified disaster relief payments are generally excluded from gross income. This means that affected taxpayers can exclude funds received from a government agency for reasonable and necessary personal, family, living, or funeral expenses—as well as for the repair or rehabilitation of their home or the repair or replacement of its contents—from their gross income.
Additional relief may be available to affected taxpayers participating in a retirement plan or IRA. For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax, allowing the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for its participants to follow, so ask your plan administrator for more information.
The IRS disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments, and tax-related actions qualifying for relief during the postponement period.