IRS announces further tax relief for taxpayers impacted by attacks in Israel, the West Bank or Gaza, plus additional relief for those impacted by California storms

The IRS has announced disaster relief extending federal tax deadlines for taxpayers affected by the attacks in the State of Israel, the West Bank or Gaza and the storms in California.  

Israel/West Bank/Gaza attacks

The IRS has announced tax filing relief for taxpayers affected by the recent attacks in Israel, the West Bank and Gaza postponing deadlines occurring from Oct. 7, 2023 through Oct. 7, 2024. Taxpayers with a principal residence or business entity (including sole proprietors) with the principal place of business located in Israel, the West Bank or Gaza (the covered area) qualify for postponement of various tax filing and payment deadlines occurring between the aforementioned timeframe. In addition, individuals, businesses or estate and trusts with books and records, or a tax preparer within the covered area, are also eligible for relief. Finally, those taxpayers killed, injured or taken hostage due to the attacks, or those affiliated with a recognized government or philanthropic organization and assisting in the covered area, qualify as well.

Affected individuals and businesses will have additional time, as noted, to file most tax returns (individual, corporate, estate and trust income tax returns; partnership returns, S corporation returns and trust returns; estate, gift and generation-skipping transfer tax returns; annual information returns of tax-exempt organizations; and employments and certain excise tax returns) and pay any taxes that were originally due. Included are: 

• Individuals who had a valid extension to file their 2022 return due Oct. 16, 2023. However, since tax payments related to 2022 returns were due on April 18, 2023, those payments are not eligible for this relief.
• 2022 calendar-year corporations extended to Oct. 16, 2023. These corporations have more time to file but not to pay.
• 2022 calendar-year tax-exempt organizations extended to Nov. 15, 2023.
• 2023 individual and business returns and payments due March 15 and April 15, 2024.
• Quarterly estimated income tax payments due Jan. 15, April 15, June 17 and Sept. 16, 2024.
• Quarterly payroll and excise tax returns due Oct. 31, 2023, and Jan. 31, April 30, and July 31, 2024.
• Retirement plan contributions and rollovers.

For affected taxpayers, penalties on payroll and excise tax deposits due on or after Oct. 7, 2023, and before Nov. 6, 2023, will be abated as long as the tax deposits were paid by Nov. 6, 2023.

Other eligible taxpayers not listed above may be able to qualify for the extended filing and payment deadlines by calling +1 (866) 562 5227. Impacted international taxpayers can call +1 (267) 941 1000.

California storms

Based on three different disaster declarations from the Federal Emergency Management Agency (FEMA), 55 of California’s 58 counties (all except Lassen, Modoc and Shasta counties) now have until Nov. 16, 2023, to file 2022 returns and pay any taxes due. 

The federal tax relief applies to:

• Individuals who live in the covered disaster area,
• Businesses (including tax-exempt organizations) whose principal place of business is located in the covered disaster area,
• Certain relief workers in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster, and
• Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline are in the covered disaster area.

Late on Oct. 16, the state of California announced it will conform to this extended relief for state filings as well.   

Taxpayers qualifying for relief but living outside the disaster area should contact the IRS at +1 (866) 562 5227.

Affected individuals and businesses will have additional time, as noted above, to file most tax returns (individual, corporate, estate and trust income tax returns; partnership returns, S corporation returns and trust returns; estate, gift, and generation-skipping transfer tax returns; annual information returns of tax-exempt organizations; and employments and certain excise tax returns) and pay any taxes that were originally due. Included are:

• 2022 individual income tax returns and payments normally due on April 18.
• For eligible taxpayers, 2022 contributions to IRAs and health savings accounts.
• Quarterly estimated tax payments normally due on April 18, June 15 and Sept. 15.
• Calendar-year 2022 partnership and S corporation returns normally due on March 15.
• Calendar-year 2022 corporate and fiduciary income tax returns and payments normally due on April 18.
• Quarterly payroll and excise tax returns normally due on May 1, July 31 and Oct. 31.
• Calendar-year 2022 returns filed by tax-exempt organizations normally due on May 15.

Affected taxpayers with casualty losses attributable to the federally declared disaster may elect to take losses into account either in the tax year the loss occurred, or the prior tax year. Those taxpayers choosing to claim their losses on the 2022 return have until Oct. 15, 2024 to make this election. If taking a disaster loss, taxpayers must include the appropriate FEMA disaster declaration number on the impacted tax return.

Finally, subject to plan rules, certain taxpayers may be eligible to take a special disaster distribution from their retirement plan without incurring the additional 10% early distribution tax and potentially spread the income recognition over three tax years. In addition, affected taxpayers may exclude certain payments received from a government agency from gross income. Payments received would have to be for reasonable and necessary personal, family, living or funeral expenses, as well as the repair or rehabilitation of their personal residence and its contents.  

Questions?

Please reach out to your Baker Tilly advisor if you have questions regarding how the federal and tax deadline relief affects you.

The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax information, if any, contained in this communication was not intended or written to be used by any person for the purpose of avoiding penalties, nor should such information be construed as an opinion upon which any person may rely. The intended recipients of this communication and any attachments are not subject to any limitation on the disclosure of the tax treatment or tax structure of any transaction or matter that is the subject of this communication and any attachments.