e-News for Tax Professionals Issue 2012-44

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Issue Number:  2012-44

Inside This Issue

1. IRS Provides Tax Relief to Victims of Hurricane Sandy; Return Filing and Tax Payment Deadline Extended to Feb. 1, 2013
2. IRS Announces Qualified Disaster Treatment of Payments to Victims of Hurricane Sandy
3. E-Services Suite Unavailable Part of This Weekend
4. Preparers Suspected of Filing Inaccurate EITC Claims to Receive Warning Letters
5. YouTube: Help for Disaster Victims
6. Impact of Daylight Savings Time Change on Modernized e-File (MeF)

In the aftermath of Hurricane Sandy, the Internal Revenue Service announced additional tax relief to affected individuals and businesses.

Following recent disaster declarations for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in Connecticut, New Jersey and New York will receive tax relief. Other locations may be added in coming days based on additional damage assessments by FEMA.

The tax relief postpones various tax filing and payment deadlines that occurred starting in late October. As a result, affected individuals and businesses will have until Feb. 1, 2013 to file these returns and pay any taxes due. This includes the fourth quarter individual estimated tax payment, normally due Jan. 15, 2013. It also includes payroll and excise tax returns and accompanying payments for the third and fourth quarters, normally due on Oct. 31, 2012 and Jan. 31, 2013 respectively. It also applies to tax-exempt organizations required to file Form 990 series returns with an original or extended deadline falling during this period. 

The IRS will abate any interest, late-payment or late-filing penalty that would otherwise apply. The IRS automatically provides this relief to any taxpayer located in the disaster area. Taxpayers need not contact the IRS to get this relief.

Beyond the relief provided by law to taxpayers in the FEMA-designated counties, the IRS will work with any taxpayer who resides outside the disaster area but whose books, records or tax professional are located in the areas affected by Hurricane Sandy. All workers assisting the relief activities in the covered disaster areas who are affiliated with a recognized government or philanthropic organization are eligible for relief.  Taxpayers who live outside of the impacted area and think they may qualify for this relief need to contact the IRS at 866-562-5227.

In addition, the IRS is waiving failure-to-deposit penalties for federal payroll and excise tax deposits normally due on or after the disaster area start date and before Nov. 26, if the deposits are made by Nov. 26, 2012. Details on available relief can be found on the disaster relief page on IRS.gov.

The tax relief is part of a coordinated federal response to the damage caused by the hurricane and is based on local damage assessments by FEMA. For information on disaster recovery, individuals should visit disasterassistance.gov.

The IRS wants to assure taxpayers, businesses and tax preparers that it is working aggressively to monitor the situation and provide additional relief as needed.
So far, IRS filing and payment relief applies to the following 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.

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The Internal Revenue Service today alerted employers and other taxpayers that because Hurricane Sandy is designated as a qualified disaster for federal tax purposes,  qualified disaster relief payments made to individuals by their employer or any person can be excluded from those individuals’ taxable income.

Qualified disaster relief payments include amounts to cover necessary personal, family, living or funeral expenses that were not covered by insurance. They also include expenses to repair or rehabilitate personal residences or repair or replace the contents to the extent that they were not covered by insurance. Again, these payments would not be included in the individual recipient’s gross income.

The IRS also announced that the designation of Hurricane Sandy as a qualified disaster means that employer-sponsored private foundations may provide disaster relief to employee-victims in areas affected by the hurricane without affecting their tax-exempt status.  Like all charitable organizations, employer-sponsored private foundations should follow the guidance in Publication 3833, Disaster Relief: Providing Assistance Through Charitable Organizations, in providing assistance to employees or their family members affected by Hurricane Sandy.

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The e-Services suite of services for tax professionals, including the Transcript Delivery System, e-file Application, Disclosure Authorization and TIN Matching, will be unavailable from Saturday, Nov. 3 at 9 p.m. ET until Monday, Nov. 5 at 6 a.m. ET for routine maintenance. 

Updates are available on the e-services login page.

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During October and November 2012, the IRS is sending letters to preparers suspected of filing inaccurate EITC claims. The letters pinpoint the primary issues identified on the returns, discuss the consequences of filing inaccurate claims for EITC and inform the preparer IRS will continue to monitor the types of claims for EITC they file. Check out EITC Central for more information on IRS compliance efforts and how to avoid penalties.

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If you or your clients are victims of Hurricane Sandy, the IRS may be able to help. Learn about the options available in this YouTube video.

Watch this and other videos on the IRS YouTube Channel.

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The IRS would like to alert you to an issue that could occur during the Daylight Savings time change scheduled this weekend. In past years, a few transmitters experienced problems with files created during the hour when the clocks moved.

We recommend that you do not create transmission files during the hour of 1:59 am, Eastern to 2:59 am, Eastern on Sunday, November 4, 2012.  Please adjust the time based on your time zone.

If you experience any problems with transmission files created early Sunday morning, please let us know through the MeF Mailbox.

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