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William Perez

Federal Tax Relief for Hurricane Sandy

By November 6, 2012

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Taxpayers impacted by Hurricane Sandy may be eligible for financial assistance from the federal government. Such financial assistance is generally tax-free, reports Anthony Nitti, who discusses the tax-treatment of disaster relief grants and insurance reimbursements.

Additionally, there's a very helpful guide to recovering financially from disasters, published by the American Red Cross and the American Institute of Certified Public Accountants. This guide has lots of helpful suggestions for managing financial difficulties that arise at different times of the disaster recovery process.

Taxpayers may also be eligible for extended deadlines to file returns and to remit tax payments:

  • Estimated Tax Payments: the 4th payment which is normally due by January 15th, 2013, has been extended to February 1, 2013.
  • Personal, Business and Payroll Tax Returns: any returns normally due to be filed between October 26, 2012 to January 31, 2013 will now be due by February 1, 2013.
  • Payroll Tax Deposits: any payroll tax deposits normally due between October 26 and November 26, 2012, are now due by November 26, 2012.

These administrative relief provisions are available to taxpayers located in the following counties and localities:

  • In Connecticut (starting Oct. 27): Fairfield, Middlesex, New Haven, and New London Counties and the Mashantucket Pequot Tribal Nation and Mohegan Tribal Nation located within New London County;
  • In New Jersey (starting Oct. 26): Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex, Monmouth, Ocean, Somerset and Union;
  • In New York (starting Oct. 27): Bronx, Kings, Nassau, New York, Queens, Richmond, Rockland, Suffolk and Westchester.

Additional locations may be added based on assessments of damage by the Federal Emergency Management Agency adds.

Casualty losses can possibly be taken as a tax deduction. For taxpayers in presidentially-declared disaster areas, casualty losses could be deducted either on an 2011 tax return or on a 2012 tax return. Kay Bell has additional information on how disaster-related casual deductions are claimed. The IRS has information on casualty losses in Tax Topic 515, Publication 584 (for losses of personal property), and Publication 584B (for losses of business property).

Excise Taxes: the IRS will be temporarily waiving penalties for not remitting semi-monthly deposits of the 24.4 cents per gallon excise tax on dyed diesel fuel that is used or sold for use on the highway. This penalty relief is available from October 30 to November 20, 2012, in the states of New Jersey, New York and Pennsylvania.

Low Income Housing Credit: the IRS is temporarily suspending restrictions for housing projects providing temporary housing to victims of Hurricane Sandy.

Links to IRS News Releases:

  • IRS Provides Tax Relief to Victims of Hurricane Sandy; Return Filing and Tax Payment Deadline Extended to Feb. 1, 2013 (IR-2012-83)
  • IRS Waives Diesel Fuel Penalty Due to Hurricane Sandy (IR-2012-85)
  • Treasury and IRS Expand Availability of Housing for Hurricane Sandy Victims (IR-2012-86)
  • Hurricane Sandy News Releases


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