Hurricane (Storm) Sandy Tax Implications & Resources

Tax Relief for Hurricane (Storm) Sandy Victims 

Federal Relief

Storm Sandy has had a severe impact on many individual and business taxpayers across the East Coast. The Internal Revenue Service, in response to the widespread and ongoing devastation, has announced relief for Affected Taxpayers with respect to the counties listed below. Victims of Hurricane Sandy whose primary home or business are located in federally declared disaster areas are considered Affected Taxpayers and may qualify for an automatic extension of time to file and pay certain types of taxes. In addition, taxpayers whose books, records or tax professionals are located in areas affected by Hurricane Sandy may also qualify for relief.

As of November 6, 2012 relief applies to the following counties:

New Jersey: Atlantic, Bergen, Cape May, Essex, Hudson, Middlesex,

Monmouth, Ocean, Somerset, and Union

New York: Bronx, Kings, Nassau, New York, Queens, Richmond,

Rockland, Suffolk and Westchester

Connecticut: Fairfield, Middlesex, New Haven, and New London Counties

and the Mashantucket Pequot Tribal Nation and

Mohegan Tribal Nation located within New London County

As the damage in remaining counties is assessed, the designated areas may be expanded as necessary.

Affected Taxpayers should consider taking advantage of the extensions that are available with respect to various tax payments and tax return filings with deadlines starting in late October, specifically October 26th for New Jersey counties and October 27th for New York and Connecticut counties. Affected Taxpayers have until February 1, 2013 to meet their Federal filing and certain payment obligations.  

Which taxpayers will benefit from relief? 

Unless otherwise stated below, the following taxpayers have until February 1, 2013 to file their tax returns or pay their tax liability: 

• All calendar year taxpayers that have a fourth quarter estimated tax payment due on December 15, 2012 or January 15, 2013 (or an estimated tax payment due sometime between the relief period of October 31, 2012 and January 31, 2013). This will include the fourth quarter estimated tax payment for most individuals and calendar year corporations.
• Taxpayers with third and fourth quarter excise and/or payroll tax returns and accompanying payments due on October 31, 2012 and January 31, 2013, respectively. However, relief for payroll or excise tax deposits normally due before the quarterly tax return is subject to a different rule as discussed below.
• Tax exempt organizations tax returns and payments with an original or extended deadline that falls within October 31, 2012 and January 31, 2013. This category includes calendar year tax exempt organizations which have obtained an extension of time to file their 2011 tax return until November 15, 2012.
• Any fiscal year taxpayer for which the original or extended income tax return due date falls between October 31, 2012 and January 31, 2013. For example, a corporation with a September 30th year end would ordinarily file its tax return or extension request by December 15, 2012.

An important exception relates to payroll and excise tax deposits due before November 26, 2012.

Payments due between the disaster start date and November 25, 2012 will be considered timely if deposited by November 26, 2012. Note that unlike the filing of the payroll or excise tax returns and accompanying payments which can be delayed until February 1, 2013, these deposits must be made by November 26, 2012.

  

More information on the Hurricane Sandy federal taxpayer relief opportunity can be found here:http://www.irs.gov/uac/Hurricane-Sandy-News-Releases  

State Relief 

The New Jersey Division of Taxation has announced an extension for filing tax returns and paying taxes which would have been due on October 30 or 31 to November 7, 2012. More information about New Jersey relief can be found here: http://www.state.nj.us/treasury/taxation/sandy-relief.shtml

The New York State Department of Taxation and Finance has announced similar relief for filing most tax returns and paying most tax obligations (other than payroll taxes) for the period beginning October 26, 2012 to before November 14, 2012 to November 14, 2012. More information about New York State relief can be found here: http://www.tax.ny.gov/bus/multi/sandy_relief.htm

The Connecticut Department of Revenue Services has announced a one week extension for October 31, 2012 deadlines to file tax returns and pay tax to November 7, 2012. More information about Connecticut relief can be found here: http://www.ct.gov/DRS

  

ExactCPA Comment: The ability to delay tax payments can provide short term relief at times when the need for funds is greatest to assist with recovery. Taxpayers who use payroll services or pay estimated tax payments via pre-arranged bank transfers may need to make special arrangements to ensure the payment is made by the special later payment deadline. And of course, taxpayers who have lost records or who are otherwise subject to business or personal disruption may benefit from the extra time available to file their returns.

Look for future ExactCPA Alerts on additional tax and financial topics related to Hurricane Sandy in the coming weeks. For more information or for questions relating to your specific situation, please contact us.

Alert: Hurricane Sandy Information for

Condominiums, HOAs & Cooperatives

November 6, 2012

• While we understand that the first "lines of defense" for most Condos, HOAs and Co-ops (collectively "CIRAs") will be their property managers and insurance agents, we believe we can also be of assistance and have compiled a list of some of the financial aspects that we feel will be of assistance as the task of rebuilding and repairing takes place.
• Make sure that expenses and insurance reimbursements related to the hurricane are recorded separately in your books and records in a manner that these costs can be easily identified. This will facilitate the process of filing insurance claims and hopefully expedite reimbursements. Please feel free to contact us if you need assistance with translating any of your financial information with regard to the filing of your insurance claims.
• Flood vs. water damages may be covered under different policies and have vast financial consequences for the CIRA and its owners. In certain complex situations, the hiring of an insurance adjuster to work on your behalf is an option.
• Different CIRAs may have different options available to them to pay for expenditures not covered by insurance. Some may have working capital funds available, while others may have to borrow from other resources within the entity. For others there may be a requirement to special assess or borrow from a bank. Please review your legal documents, as well as, discuss these options with your legal professionals. Feel free to contact us if you need assistance relative to your particular needs.
• Some CIRAs that have outstanding bank loans are wondering what effect if any, hurricane damage may have on the status of their loans. We recommend that loan documents regarding this issue are reviewed or discussed with legal counsel.
• The following website might be useful to obtain information on government assistance from entities such as FEMA: http://www.disasterassistance.gov or http://www.fema.gov
• Consider reviewing your documents regarding authorization for emergency expenditures.
• Finally, combining repairs with a near term replacement might result in cost savings.

Tax Alert: Hurricane Emergency Sales Tax Exemption Program (HESTEP)

In response to the impact caused by Hurricane Sandy on New York City businesses,

the New York City Industrial Development Agency has established the

Hurricane Emergency Sales Tax Exemption Program ("HESTEP") to assist small businesses.

HESTEP is providing a sales tax exemption up to $100,000 for each applicable company for purchases of building, construction and renovation materials, machinery and equipment and other items of personal property and related services needed to rebuild after the storm.

The sales tax waiver will be limited to 250 applicants

and has a maximum $100,000 sales tax benefit.

All businesses with storm-related physical damages are eligible for the

exemption program, however, priority will be given to industrial businesses

located within Flood Zone A and the area of New York City impacted by an

extensive power outage as a direct result of Hurricane Sandy.

The scope of renovations may include: repairs, in-kind replacements and reconstruction of facilities damaged by the hurricane. Reconstruction efforts must begin within six months of the application and must fully utilize the sales tax benefit within one year of commencement. For more information on this program and to obtain the HESTEP application please visit http://www.nycedc.com/backtobusiness.

ExactCPA Comment: Note that the pool of applicants for this sales tax exemption is limited to 250. It is imperative for interested business applicants to act immediately for this assistance.

Updated Tax Alert:
Additional Tax Filing Extension for Businesses Affected by Hurricane Sandy in New Jersey & Connecticut

The States of New Jersey and Connecticut have approved further relief from tax filing deadlines for businesses still reeling from the impact of Superstorm Sandy.

New Jersey

The State of New Jersey previously extended the due date for filing tax returns and paying certain taxes originally due on October 30 or 31 to November 7, 2012. However, based on recent events the state government felt that further relief was needed by those hit the hardest by the storm.

The new deadline for tax returns and taxes originally due on October 30 or 31 is now November 14, 2012. This extension applies to all counties in New Jersey. Taxpayers qualifying for this relief include businesses located in New Jersey, out-of-state businesses with operations in New Jersey, as well as taxpayers whose tax records and tax preparers are located in New Jersey. Non-resident taxpayers with tax filing obligations in New Jersey who are also located in states that suffered Superstorm Sandy damage are also eligible for the extended due date.
Read more: http://www.state.nj.us/treasury/pdf/Additional_Tax_Filing_Extension11-08-12.pdf

• More information on the Hurricane Sandy federal taxpayer relief opportunity can be found here: http://www.irs.gov/uac/Hurricane-Sandy-News-Releases
• The New Jersey Division of Taxation has announced an extension for filing tax returns and paying taxes which would have been due on October 30 or 31 to November 7, 2012. More information about New Jersey relief can be found here:http://www.state.nj.us/treasury/taxation/sandy-relief.shtml