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Disaster victim tax relief

By Kay Bell ·
Wednesday, April 18, 2012
Posted: 3 pm ET

The April 14-15 weekend was not a good one in much of Iowa, Kansas, Nebraska and Oklahoma.

More than 100 tornadoes were reported in those states, some touching down with deadly force. Places that were spared direct twister hits endured high winds, large hail and some flooding.

Taxes obviously weren't on the minds of residents in those states as they dealt with the storms and aftermath. But Mother Nature's bad timing meant that they had to deal with filing their 2011 tax returns on April 17 on top of much more pressing concerns.

In these cases, the Internal Revenue Service understands. When a natural catastrophe is declared a major disaster by the president, special tax consideration is given to affected residents.

Special tax treatment

Storm victims typically are given added time to file tax returns or meet other deadlines, such as payroll tax payments by businesses.

Taxpayers who suffer major disaster damage also get the option to claim damages in the year in which they occurred or amend their prior year's return and claim the property losses then.

Sometimes the amended filing will get taxpayers larger refunds than they originally received. Even better, it will get them the money sooner since they don't have to wait until next year to file 2012 tax year claims.

The decision to declare major disaster is based in large part on the assessments by Federal Emergency Management Agency, or FEMA, personnel. The federal agents are in touch with leaders of the tornado-ravaged Midwestern states, as well being on site in the hardest-hit locales.

But the evaluation process takes time.

West Virginia taxpayers, for example, endured mid-March storms that produced flooding, mudslides and landslides. Almost a month later, on April 13, FEMA and the IRS announced that residents of some parts of the Mountaineer State are eligible for major disaster area tax relief.

Case-by-case tax relief

Obviously, no tax decision was possible in the four days between the Midwest tornadoes and Tax Day 2012. Residents of the areas should keep checking the FEMA and IRS websites for announcements.

As for the just-passed April 17 filing deadline, storm-affected taxpayers who weren't able to meet it should file their returns as soon as reasonably possible.

They also should identify themselves as having been affected by the severe storms. Noting the storm date in red atop a paper-filed return is a good way to get the IRS' attention. So is an attached letter explaining why the 1040 wasn't filed on time.

The IRS will consider requests for late-filing penalty leniency on a case-by-case basis.

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