Code Secs. 165, 6081, 6161, 6302 and 7508A

The IRS has announced that it will provide special tax relief for southern California residents in the presidentially-declared disaster area that was struck by wildfires beginning October 21, 2003. The disaster area counties are Los Angeles, San Bernardino, San Diego and Ventura. The IRS will provide tax relief to individuals and businesses located in the disaster area, those whose tax records are located in the disaster area and relief workers.

Affected taxpayers have until the last day of the extension period, which is October 21 through December 29, 2003, to file tax returns or make tax payments that have either an original or extended due date falling within this period. The IRS will abate interest and any late filing or late payment penalties that would apply during these dates to returns or payments subject to these extensions. Affected taxpayers also will have until the last day of the extension period to perform other certain time-sensitive actions described in Reg. §301.7508A-1(c)(1) and Rev. Proc. 2002-71, I.R.B. 2002-46, 850, that must be performed during this period.

The extension of time to file and pay does not apply to information returns or to employment and excise tax deposits. However, the IRS may abate penalties on such deposits for affected taxpayers due to reasonable cause during the Federal Tax Deposit Penalty Waiver Period, which is October 21 through November 7, 2003, provided that they make the payment by the last day of that period.

Affected taxpayers may claim disaster-related casualty losses on their federal income tax returns for either 2003 or 2002. The IRS states that claiming the loss on an original or amended return for 2002 will result in an earlier refund; claiming the loss on a 2003 return, however, may result in a greater tax savings. Personal property losses that are not covered by insurance or other reimbursements may be deducted. First, taxpayers must subtract $100 for each casualty event and then subtract ten percent of their adjusted gross income from their total casualty losses for the year. The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers who need them to apply for benefits or to file amended returns claiming casualty losses.

Affected taxpayers taking advantage of the extended time period, claiming a disaster loss, filing requests for copies of previously filed tax returns or requesting any other disaster relief described herein are instructed to indicate the disaster designation, “CA Wildfires,” at the top of the appropriately filed form in red ink. Back references: 2003FED ¶10,005.16, ¶10,005.23, ¶36,789.213 and ¶42,687C.22; FINH ¶15,118.05, ¶15,120.05, ¶15,196.35 and ¶16,070.05; ETR ¶39,845.15, ¶43,235.15, ¶43,335.32 and ¶51,075.58.

IR-2003-126, 2003FED ¶46,847
IR-2003-126, FINH ¶30,247
IR-2003-126, ETR ¶66,695