IRS Grants Deadline Relief to Ernesto Victims in U.S. Virgin Islands, Postponed to Feb. 3, 2025

IRS Grants Deadline Relief: The Internal Revenue Service releases special tax relief for those individuals and businesses in the U. S. Virgin Islands affected by Tropical Storm Ernest from August 13, 2024.

These taxpayers are now able to file various federal individual and business tax returns as well as make tax payments before February 3, 2025. The relief is given to any location FEMA has defined as a disaster area, according to the IRS.

This implies that the residents of the US Mainland as well as those who do businesses in the U. S. Virgin Islands’ four islands will enjoy the tax benefits. The current list of eligible localities is always updated and indicated in the Tax Relief in Disaster Situations page of IRS.gov.

Filing and payment relief

The tax relief extends different types of filing due dates and payment due dates, which were effective from August 13, 2024, to February 3, 2025 (postponement period). Consequently, persons and companies that fall within this window of time to have filed their returns or tax assessments will now be afforded until February 3, 2025, to do so.

This means, for example, that the Feb. 3, 2025, deadline will now apply to:

• Any taxpayer who has a proper extension to file a federal tax return for the year 2023 is eligible for it. The IRS pointed out, though, that the payments on these returns filed are not entitled to the additional time as they were due last spring before the storm happened.
• Estimated payments of income tax to be paid quarterly on the 15th of September, 2024 and the 15th of January, 2025.
• Oct. ’24 and January. ’25 calculations of quarterly payroll and excise tax returns are frequently expected to be filed on the said dates.

Further, for penalties pertaining to non-filing and non-payments of payroll and excise tax to or after August 13, 2024, and before August 28, 2024, the IRS has agreed to waive penalties if the filings and payments are made by August 28, 2024.

The Disaster Assistance and Emergency Relief for Individuals and Businesses page has information on other returns, payments and tax action that may be done during the postponement period.

The IRS grants filing and penalty relief to any taxpayer that the IRS has an address on record in the disaster area. These taxpayers do not have to approach the agency in order to get this relief.

In a given case, an affected taxpayer may not have an IRS address of record in the disaster area; say, he or she relocated to the disaster area after filing the return. However, in such special conditions, the concerned taxpayer may get a penalty for filing a return or payment extension of period from the IRS. To have the penalty waived the number that the taxpayer should call is indicated on the notice.

Further, the IRS will assist any taxpayer who resides in any locality other than the disaster area but whose records essential to the completion of a tax filing deadline within the postpone period are available in the affected area.

The taxpayers receiving relief who do not reside in the hurricane disaster area must file for relief with the IRS by calling 866-562-5227. This also includes the workers who are involved in the relief activities through being a member of a government or charitable nonprofit organization. Practitioners with clients located outside the disaster area but residing in the disaster area may request to use the bulk requests option from practitioners for disaster aid as described on IRS.gov.

Additional tax relief

Those affected disaster areas, including individuals and businesses who have incurred uninsured or unreimbursed disaster-related losses resulting from federally declared disasters, can elect to deduct them either on the return for the year the disaster occurred; in the case of this notice, it is the 2024 return normally filed in the year after the disaster occurred, or on the prior year return or 2023 in this instance, to be filed in this year. Taxpayers have more time—up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (and without regard to any extension of time to file a return)—to make the election. In the case of the individual taxpayers, the above provision means October 15, 2025. It is also important to write FEMA declaration number 3611-EM on any return claiming a loss. See Publication 547, Casualties, Disasters and Thefts, for more information.

Exemptions from gross income normally include qualified disaster relief payments. In general, what this means is that such taxpayers are entitled to exclude any amount received from a government agency for ‘reasonable and necessary’ personal, family, living, or funeral expenses, and for the repair or rehabilitation of a home, or for repair or replacement of its contents. For more information, see Publication 525, Taxable and Nontaxable Income.

Other relief for taxpayers adversely affected may be relief that applies to individuals participating in a retirement plan or IRA. For instance, a taxpayer may be in a position to receive special disaster distribution that the taxpayer would otherwise be charged with an extra 10% of early distribution tax and is also allowed to report the income in the following three years. Another way of accessing the funds could also be by using the HRA from the taxpayers. There are always terms and conditions, advice and guidelines that surround these plans or the IRA they partake in.

The IRS may undertake other relief in the future in the area for affected persons and business entities.

This kind of tax relief is a part of the federal response to the losses incurred by this storm and is pegged on the FEMA assessment of losses within a given area.

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