Tuesday, March 25, 2014

March 25, 2014, the IRS Issued Special Relief to Colorado Taxpayers Who Experienced the September 2013 Floods

March 25, 2014, the IRS Issued Special Relief to Colorado Taxpayers Who Experienced the September 2013 Floods
 It is important to note that while Colorado residents experienced several federally declared disasters in 2013, the Notice that the IRS issued today only affects those taxpayers who were affected by the September floods. None of the other disasters are covered by this announcement.

In the February 11-13th meetings that I spoke at in Color1ado, I stated that there were no extensions on the filing date of April 15, 2014 for amended returns to claim the 2013 loss on a 2012 return. Extensions are granted on an individual basis. The IRS is using a special Code Section 7508A that allows the Secretary of the Treasury to invoke delays in filing deadlines. That is what is being done in this Notice.

BE CAREFUL!!!
THIS DEADLINE DELAY FOR FILING AN AMENDED RETURN FOR 2012 TO CLAIM THE 2013 LOSS DOES NOT CHANGE THE FACT THAT A RETURN FOR 2013 IS STILL DUE AND THAT RETURN MAY BE EXTENDED BY FILING AN AUTOMATIC EXTENSION APPLICATION FOR 2013.

ADDITIONALLY, AS I ALWAYS CAUTION "DON'T RUSH TO DEDUCT! AND PLEASE READ THE POST BY THAT TITLE.

Additional Help for Taxpayers Recovering From a Catastrophic Loss

An organization with over twenty years experience assisting people who experience catastrophic event, United Policyholders (UP) offers many useful programs. If you need additional assistance and have not seen the  UP website, here is a link:

For a general link to the UP website use this link: http://www.uphelp.org/


Here is the complete post from the IRS website:
IRS Gives Colorado Flood Victims More Time To Decide When To Claim Losses
IR-2014-35, March 25, 2014
WASHINGTON — The Internal Revenue Service today provided taxpayers an extension until Oct. 15, 2014, to decide when to claim disaster losses arising from last September’s flooding.
The extension means that eligible individuals and businesses will now have until Oct. 15 to decide whether to claim these losses on either their 2012 or 2013 returns. Without this extension, these taxpayers would have had to make this choice by the original due date for the 2013 return, usually April 15.
Depending upon various income factors, claiming losses on a 2012 return versus a 2013 return could result in greater tax savings for some taxpayers. The extra time is available, regardless of whether a taxpayer requests a tax-filing extension for either year.
Eligible taxpayers are those who suffered uninsured or unreimbursed losses resulting from severe storms, flooding, landslides and mudslides in the 20 federally-designated disaster area counties from Sept. 11 to Sept. 30, 2013. The disaster area counties are Adams, Arapahoe, Boulder, Broomfield, Clear Creek, Crowley, Denver, El Paso, Fremont, Gilpin, Jefferson, Lake, Larimer, Lincoln, Logan, Morgan, Pueblo, Sedgwick, Washington and Weld.
Though taxpayers who miss the new Oct. 15 cut-off will lose the option of claiming their losses for 2012, they will still be able to claim them on an original or amended 2013 return. Further details are in Notice 2014-20, posted today on IRS.gov and also scheduled to be in Internal Revenue Bulletin 2014-15, dated April 7, 2014.


Below is the full text of  Notice 2014-20.
The underlined and bolded text have been added by John Trapani, CPA.


Postponement of Deadline for Making an Election to Deduct for the Preceding Taxable Year Losses Attributable to Colorado Severe Storms, Flooding, Landslides, and Mudslides


Notice 2014-20

PURPOSE
This Notice postpones until October 15, 2014, the deadline to make an election under § 165(i) of the Internal Revenue Code to deduct in the preceding taxable year losses attributable to damage from severe storms, flooding, landslides, and mudslides sustained in a federally declared disaster area in Colorado.  This postponement is granted under § 7508A.
BACKGROUND
From September 11 through September 30, 2013, severe storms, flooding, landslides, and mudslides in Colorado (Colorado major flooding event) caused significant damage.  The President of the United States issued major disaster and emergency declarations under the authority of the Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. §§ 5121-5206 (Stafford Act), for certain areas in Colorado.  The Federal Emergency Management Agency (FEMA) determined certain areas within Colorado to be eligible for Public Assistance or Public Assistance and Individual Assistance under the Stafford Act.
Section 165(i) provides that if a taxpayer sustains a loss attributable to a federally declared disaster occurring in a disaster area, the taxpayer may elect to deduct that loss on the taxpayer's return for the taxable year immediately preceding the taxable year in which the disaster occurred.  For purposes of § 165(i), a federally declared disaster is a disaster determined by the President to warrant assistance by the Federal Government under the Stafford Act (including a disaster for which the President issues a major disaster declaration or an emergency declaration), and a disaster area is the area so determined to be eligible for such assistance.  See § 165(h)(3)(C) and 42 U.S.C. § 5122. 
Section 1.165-11(e) of the Income Tax Regulations requires a taxpayer to make the § 165(i) election by filing a return, an amended return, or a refund claim on or before the later of:  (1) the due date of the taxpayer's income tax return (determined without regard to any extension of time for filing the return) for the taxable year in which the disaster actually occurred; or (2) the due date of the taxpayer's income tax return (determined with regard to any extension of time for filing the return) for the immediately preceding taxable year.  Section 1.165-11(e) provides that the return or claim should specify the date or dates of the disaster that gave rise to the loss, and the city, town, county, and State in which the property that was damaged or destroyed was located at the time of the disaster.  In general, the election is irrevocable 90 days after the taxpayer makes the election.
Section 7508A provides the Secretary of the Treasury with authority to postpone the time for performing certain acts under the internal revenue laws for up to one year for a taxpayer affected by a federally declared disaster.  Section 301.7508A-1(c)(1) of the Regulations on Procedure and Administration lists several specific acts performed by taxpayers for which § 7508A relief may apply, and § 301.7508A-1(c)(1)(vii) authorizes the IRS and Treasury Department to specify additional acts.  Section 301.7508A-1(d)(1) describes several types of affected taxpayers eligible for relief under § 7508A.  Section 301.7508A-1(d)(1)(ix) authorizes the IRS to determine that any other person is affected by a federally declared disaster and therefore eligible for relief.  Under § 301.7508A-1(d)(2), the area of a federally declared disaster for which the IRS has determined that the postponement of one or more deadlines applies is referred to as a covered disaster area.
AFFECTED TAXPAYERS FOR WHICH THE SECTION 165(i) DEADLINE IS POSTPONED
Under the authority of § 7508A and §§ 301.7508A-1(c)(1)(vii) and 301.7508A-1(d)(1)(ix), the IRS has determined that the areas that FEMA has determined to be eligible for Public Assistance or Public Assistance and Individual Assistance pursuant to the major disaster and emergency declarations issued in response to the Colorado major flooding event are covered disaster areas.  A list of those areas is available at the Federal Emergency Management Agency (FEMA) website at www.fema.gov/disaster.
Under the authority of § 301.7508A-1(d)(1)(ix), a taxpayer is an affected taxpayer to which the postponement of the deadline for making the § 165(i) election applies if:  (1) the taxpayer sustained a loss attributable to the Colorado major flooding event; (2) the loss occurred in a covered disaster area for  the Colorado major flooding event (regardless of whether the taxpayer’s principal residence or principal place of business is in one of the covered disaster areas); and (3) the deadline for the taxpayer to make a § 165(i) election for that loss, but for this notice, would be before October 15, 2014.
Affected taxpayers for purposes of this notice are not affected taxpayers for purposes of other relief provided by the IRS unless the taxpayer separately qualifies as an affected taxpayer under other guidance issued by the IRS. 
GRANT OF RELIEF
Under the authority of § 7508A, the IRS grants affected taxpayers, as defined above, a postponement to October 15, 2014, to make an election under § 165(i) for losses attributable to the Colorado major flooding event.
To assist the IRS in identifying affected taxpayers to ensure that they receive this postponement of the deadline to make the § 165(i) election, affected taxpayers should include a reference to this notice, Notice 2014-20, with their return, amended return, or refund claim on which they are making a postponed § 165(i) election pursuant to this notice.  The return or claim should also include the other information requested in § 1.165-11(e).
This notice is limited to making an election under § 165(i) and does not affect the application of any other section of the Code or the regulations.
DRAFTING INFORMATION

The principal author of this notice is Daniel A. Cassano of the Office of Associate Chief Counsel (Income Tax & Accounting). For further information regarding this notice contact Mr. Cassano on (202) 317-7011(202) 317-7011 (not a toll-free call).




JOHN TRAPANI assists both taxpayers directly and advises taxpayers’ tax professionals.
This material was contributed by John Trapani. A Certified Public Accountant who has assisted taxpayers since 1976, in analyzing and reporting transactions of the type covered in this material.  

© 2014, John Trapani, CPA,
All rights to reproduce or quote any part of the chapter in any other publication are reserved by the author. Republication rights limited by the publisher of the book in which this chapter appears also apply.


JOHN TRAPANI


Certified Public Accountant


2975 E. Hillcrest Drive, #403


Thousand Oaks, CA 91362


(805) 497-4411       E-mail John@TrapaniCPA.com




Blog: www.AccountantForDisasteRrecovery.com


                                                                                         
It All Adds Up For You





Internal Revenue Service Circular 230 Disclosure
This is a general discussion of tax law. The application of the law to specific facts may involve aspects that are not identical to the situations presented in this material. Relying on this material does not qualify as tax advice for purpose of mounting a defense of a tax position with the taxing authorities
The analysis of the tax consequences of any event is based on tax laws in effect at the time of the event.
This material was completed on the date of the posting










Saturday, March 15, 2014

DISASTER TAX ADVICE IN THE MEDIA



DISASTER TAX ADVICE IN THE MEDIA


BLOGGING CPA ASSISTS COLORADO TAXPAYERS RECOVERING FROM 2013 DISSTERS
Ventura County CPA, John Trapani, who has been assisting California taxpayers with their disaster income tax reporting responsibilities for over twenty years, was invited to speak to taxpayers in three counties in Colorado on “Post Disaster Income Tax Issues” recently.
The counties of Larimer, Boulder and El Paso are among many Colorado communities that experienced fire and flood disaster losses of “biblical proportions” in 2013. As part local governments’ disaster recovery assistance to their citizens, they sought the assistance of someone with years of experience assisting taxpayers in these unique situations. In cooperation with United Policyholders of San Francisco (www.uphelp.org), the three counties brought the disaster tested Thousand Oaks CPA to Colorado to bring his knowledge of the complex disaster tax rules to their citizens. Trapani was enthusiastic about helping the people who suddenly had their homes burned to the ground or literally washed away in the September 2013 storms.
VIDEO OF COLORADO PRESENTATION AVAILABLE ON YOU TUBE
The three taxpayer meetings were attended by a broad cross-section of the affected populous. The Larimer County meeting drew more than twice the anticipated audience. The Boulder meeting was moved from the Boulder Court House to a larger venue to accommodate the overflow attendance. Many in the El Paso County audience stayed over 30 minutes to get their questions answered. Over 400 people attended the three meetings.
The El Paso County meeting held in the County Commissioners meeting hall was live streamed on the county’s cable channel. It was also video recorded by the county and uploaded to YouTube at:
http://www.youtube.com/watch?v=0svQ5LkBgKs
You Tube VIDEO TITLE:  "POST DISASTER INCOME TAX ISSUES"
PRESENTED BY EL PASO COUNTY, COLORADO & UNITED POLICYHOLDERS
February 13, 2014 - CENTENNIAL HALL

TRAPANI WENT TO COLORADO SOON AFTER 20TH ANNIVERSARY OF THE 1994 NORTHRIDGE EARTHQUAKE
Trapani has concentrated on working with people who experience catastrophic losses after his personal residence was severely damaged by the 6.7 magnitude, 1994 Northridge Earthquake, the twentieth anniversary of that earthquake was recently observed on January 17th. That earthquake devastated the San Fernando Valley region of Los Angles and surrounding communities, including parts of Simi and Conejo Valleys. Trapani’s home was less than two miles from the epicenter of the quake. “It felt like twenty freight trains coming through the middle of our home all at once,” he recalls.
COLORADO PRESS INTERVIEWS VENTURA COUNTY CPA
A week after the Colorado presentations, BOULDER DAILY CAMERA business reporter, Alicia Wallace, wrote an article that featured important tax information Trapani supplied to the reporter. After the initial publication, February 23, 2014: “Taxes could be murky for Boulder County's flood victims.” (http://www.dailycamera.com/boulder-business/ci_25201867/taxes-could-be-murky-boulder-countys-flood-victims?IADID=Search-www.dailycamera.com-www.dailycamera.com), the article was picked up by several other news outlets including the DENVER POST on March 1, 2014, “http://www.denverpost.com/breakingnews/ci_25201867/taxes-could-be-murky-boulder-countys-flood-victims?source=rss.”

Trapani remembers the emotional shock he and his family experienced from the 1994 earthquake and saw that same look on the faces of people he assists who experienced their own disaster. “I saw that look on the faces of the people in Colorado,” Trapani recalls.
TRAPNI’S CPA FIRM OFFERS FREE DISASTER PLANNING BOOKLET AND SEMINAR TO COMMUNITY GROUPS
Trapani notes:  “That shock after a disaster that people experience is partly due to the realization that important records have been lost in the disaster. Many of the records cannot be replaced and other records are needed to report the disaster on their tax returns. I can’t bring back their home, but I can help with the income tax issues.” That look he first saw in 1994, and then saw when he spoke to groups of taxpayers in Santa Barbara in 2009 after the 2008 Tea Fire and the 2009 Jesusita Fire inspired Trapani to compile a booklet that guides people through a three step process of planning for a successful recovery after a disaster before it occurs. Trapani has spoken to Conejo Valley service clubs and church congregations to encourage their members to “Plan, Prepare, Stay Informed” in advance to “Prevail” after a disaster strikes.
From his office in Thousand Oaks, Trapani has provided tax and accounting services to Ventura and Santa Barbara County clients since 1995.



JOHN TRAPANI assists both taxpayers directly and advises taxpayers’ tax professionals.
This material was contributed by John Trapani. A Certified Public Accountant who has assisted taxpayers since 1976, in analyzing and reporting transactions of the type covered in this material.  

© 2014, John Trapani, CPA,
All rights to reproduce or quote any part of the chapter in any other publication are reserved by the author. Republication rights limited by the publisher of the book in which this chapter appears also apply.


JOHN TRAPANI


Certified Public Accountant


2975 E. Hillcrest Drive, #403


Thousand Oaks, CA 91362


(805) 497-4411(805) 497-4411       E-mail John@TrapaniCPA.com




Blog: www.AccountantForDisasteRrecovery.com


                                                                                         
It All Adds Up For You





Internal Revenue Service Circular 230 Disclosure
This is a general discussion of tax law. The application of the law to specific facts may involve aspects that are not identical to the situations presented in this material. Relying on this material does not qualify as tax advice for purpose of mounting a defense of a tax position with the taxing authorities
The analysis of the tax consequences of any event is based on tax laws in effect at the time of the event.
This material was completed on the date of the posting