IRS extends tax filing deadline for Hurricane Idalia victims

ARTICLE | August 31, 2023

Authored by RSM US LLP

Executive summary: 

IRS postpones various tax filing and tax payment deadlines for Florida hurricane victims. Affected taxpayers in certain counties will have until Feb. 15, 2024 to file returns and pay any taxes that were originally due during this period.

IRS extends tax filing deadline for Hurricane Idalia victims

Filing and payment relief for affected taxpayers in certain Florida counties

The IRS issued guidance granting relief to taxpayers affected by Hurricane Idalia in Florida (FL) that began on Aug. 27, 2023. Taxpayers now have until Feb. 15, 2024, to file various individual and business tax returns and make tax payments. Individuals residing in and businesses with an address in Alachua, Baker, Bay, Bradford, Calhoun, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Franklin, Gadsden, Gilchrist, Gulf, Hamilton, Hardee, Hernando, Hillsborough, Jefferson, Lafayette, Lake, Lee, Leon, Levy, Liberty, Madison, Manatee, Marion, Nassau, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, Sumter, Suwannee, Taylor, Union, Volusia and Wakulla counties qualify for relief. The relief postpones various tax filing and payment deadlines that were originally due on or after Aug. 27, 2023, and before Feb. 15, 2024. This includes taxpayers with valid extensions to file their 2022 tax returns that will run out on Sep. 15, 2023 and Oct. 16, 2023. The relief does not include payments related to these 2022 returns because those payments were due on April 18, 2023. 

The Feb. 15, 2024, due date applies to quarterly estimated income tax payments normally due Sep. 15, 2023 and Jan. 16, 2024, and the quarterly payroll and excise tax returns normally due Oct. 31, 2023 and Jan. 31, 2024. The relief also applies to calendar-year partnerships and S corporations whose 2022 extensions run out on Sep. 15, 2023, as well as calendar-year corporations whose 2022 extensions run out of Oct. 16, 2023. This also includes tax-exempt organizations, including 2022 calendar-year returns whose 2022 extensions will run out on Nov. 15, 2023. In addition, penalties on payroll and excise tax deposits after Aug. 27, 2023 and before Sep. 11, 2023 will be abated as long as the deposits are made by Sep. 11, 2023. 

The IRS relief includes other time-sensitive actions described in Reg. section 301.7508A-1(c)(1) and Rev. Proc.  2018-58; filing Form 5500 series returns due on or after the respective disaster due on or after Aug. 27, 2023 and before Feb. 15, 2024; and transferors who are not affected taxpayers but who are involved in a section 1031 like-kind exchange pursuant to section 17.02(2) of Rev. Proc. 2018-58.

Disaster-related casualty losses

In addition to extensions of time to file tax returns and complete certain actions, presidential disaster declarations offer taxpayers special options with respect to gain/loss recognition. Taxpayers who experience a casualty loss in a presidentially-declared disaster area may qualify to recognize losses in the year prior to the year the casualty actually occurred under section 165(i). Taxpayers who realize gains by receiving insurance proceeds in excess of basis may be able to defer gain recognition by reinvesting in qualified property under section 1033. Some of these actions are time sensitive, so taxpayers are encouraged to contact their tax advisor to take advantage of the full range of relief options. Taxpayers that will claim a disaster loss should note 'Disaster Designation – Hurricane Idalia’ in bold letters at the top of their return and also include the FEMA disaster declaration number. For the Aug. 27, 2023 Hurricane in Florida, the designation is DR-3596-EM. 

Please see the applicable news release and refer to Publication 547 and Instructions to Form 4684 Casualties and Thefts for instructions.

Automatic penalty relief

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. However, if an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extending filing, payment or deposit due date falling within the postponement period, the taxpayer or their representative should contact the IRS to have the penalty abated.

Relief for those impacted outside the disaster area

The IRS will also work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization. 

Other relief

Qualified disaster relief payments are generally excluded from gross income. This means that affected taxpayers can exclude from their gross income amounts 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 for the repair or replacement of its contents. See Publication 525 for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (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 and allows 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 their participants to follow.