Tax Relief for Texas: IRS Responds to Baryl

Howdy, Texas tax experts! If Hurricane Beryl has thrown your financial plans into a tailspin, you might be thinking, "Houston, we have a problem." Well, the IRS has some good news for you. Thanks to a disaster declaration from FEMA, individuals and businesses in 67 Texas counties now have until February 3, 2025, to file various federal individual and business tax returns and make tax payments. This is your guide to navigating the stormy seas of tax deadlines, with a few laughs along the way.

First things first, who gets this tax relief? If your client lives or runs a business in any of the following counties, they qualify: 

Anderson, Angelina, Aransas, Austin, Bowie, Brazoria, Brazos, Burleson, Calhoun, Cameron, Camp, Cass, Chambers, Cherokee, Colorado, Dewitt, Fayette, Fort Bend, Freestone, Galveston, Goliad, Gregg, Grimes, Hardin, Harris, Harrison, Hidalgo, Houston, Jackson, Jasper, Jefferson, Kenedy, Kleberg, Lavaca, Lee, Leon, Liberty, Madison, Marion, Matagorda, Milam, Montgomery, Morris, Nacogdoches, Newton, Nueces, Orange, Panola, Polk, Refugio, Robertson, Rusk, Sabine, San Augustine, San Jacinto, San Patricio, Shelby, Trinity, Tyler, Upshur, Victoria, Walker, Waller, Washington, Webb, Wharton, and Willacy. Now that we know the affected areas, let’s understand how to help them.

Practitioners' Guide to Helping Clients

Now, here’s something special for tax practitioners who might be pulling their hair out trying to keep up with deadlines for clients inside and outside the disaster area. If you’re a practitioner located in the covered disaster area and maintain records necessary to meet a filing or payment deadline for clients outside the disaster area, you can get some relief, too. 

To identify these clients, you can contact the IRS. Just remember, the IRS will need to authenticate your authorized relationship with the client through a Power of Attorney (POA). Make sure the Centralized Authorization File contains the POA before the relief is added to a taxpayer’s account. Alternatively, you can fax the POA for processing if needed. 

If you have records for ten or more clients, follow these steps: 

• Prepare an Excel spreadsheet with the following: 
  1. Column A: List your clients' TINs (make sure to separate SSNs and EINs, indicating the type by using dashes in the correct places). 
  2. Column B: List the first four letters of the client’s last name or business name in uppercase (no periods, commas, or additional wording). 
• Use the first four letters of the taxpayer’s last name on Trusts and Estates. 
• And do not include TINs of clients who live within the disaster declared area. 
• Mail the electronic media to IRS.  

Be sure to include "Stop 96C" to ensure timely processing.  Include a cover letter requesting relief from penalties and/or interest. This letter should contain your name, address, and a statement identifying which disaster affected your clients. Including a copy of the IRS news release is helpful but not necessary. 

What's Covered?

Here's the deal: any tax filing or payment deadlines that fell between July 5, 2024, and February 3, 2025, are postponed. This means you have extra time to file your client's returns and pay their taxes without facing penalties. For instance: 

• Extended Individual Returns: If you have taken a valid extension for your 2023 federal return for your client, you now have until February 3, 2025, to file it. But don’t get too excited payments on these returns were due last spring. 
• Quarterly Payments: Quarterly estimated income tax payments due on September 16, 2024, and January 15, 2025, are now due on February 3, 2025. 
• Payroll and Excise Taxes: Quarterly payroll and excise tax returns due on July 31, October 31, 2024, and January 31, 2025, also get a reprieve.

Penalty Abatement and Casualty Losses

For those who missed payroll and excise tax deposits due between July 5 and July 22, 2024, the IRS is abating penalties if those deposits were made by July 22. That's right, no penalties if you were just a tad late, provided you beat the July 22 deadline. 

If your client’s home or business suffered uninsured or unreimbursed losses due to Hurricane Beryl, it can be claimed on federal income tax return for the year the loss occurred (2024) or the prior year (2023). You have up to six months after the due date of 2024 return to make this election. For individuals, this means October 15, 2025. Just be sure to write "FEMA declaration number 4798-DR" on any return claiming a loss. 

Automatic Relief

The IRS automatically provides this relief to any taxpayer with an address of record in the disaster area. If your client moved there after filing the return they will get a penalty notice, call the number on the notice to get it abated. Easy peasy, lemon squeezy! 

We know you are wondering, what if your client lives outside the disaster area? We've got you. If someone lives outside the disaster area but has records there, they can still qualify for relief. Just call the IRS disaster hotline at (866) 562-5227. This also applies to relief workers and anyone assisting in the disaster area. 

The IRS is waiving fees for copies of previously filed tax returns for affected taxpayers. Use Form 4506 or Form 4506-T, write "FEMA declaration number 4798-DR" at the top, and submit it to the IRS.  

As Sheldon Cooper in The Big Bang Theory said: 'I believe in a clean and orderly system. I have a color-coded calendar for everything, even my taxes.' Let's channel that same energy and get tax filings done before the new deadline! 

Navigating tax deadlines can be as tricky as driving through Houston traffic during a downpour. But with this relief, you can breathe a bit easier. Stay safe, stay organized, and remember that the IRS is here to help you weather the storm. 

For more details, visit the IRS’s Disaster Assistance and Emergency Relief for professionals. Keep your chin up, Texas, and let's get through this together. After all, as they say, "When it rains, it pours—but Texans always find a way to dance in the rain." Stay tunes for more such updates with my-CPE Insights.