Disaster Relief: Preparing for the Unknown

by Ashley Kittrell | Oct 03, 2018
Hurricanes, wildfires, earthquakes, and other natural disasters disrupt everyday life and have both short and long term impacts on victims. These include work and deadlines for CPA practitioners and taxpayers. Loss of financial records and important information, power outages, and damages all prevent CPAs from serving their clients and potentially completing work before an IRS filing deadline.

Currently, there are no permanent policies in the Internal Revenue Code for taxpayers who are affected by natural disasters, meaning almost every situation is dealt with separately. The AICPA has proposed permanent disaster relief tax provisions to the Internal Revenue Code. The proposal outlines 10 changes that would immediately take effect when the Federal Emergency Management Agency (FEMA) issues an “emergency declaration” or a “major disaster declaration.” Such policies would benefit both individuals and businesses that are located in the affected area and are eligible for disaster assistance.

In addition, the AICPA has recommended that the IRS be given authority by Congress(see item 13) to postpone deadlines when state governments declare a disaster. IRC section 7508A only allows the IRS to postpone deadlines during federally declared disasters. Given the timing of state government-declared emergencies, these changes would accelerate IRS responsiveness and allow CPAs to provide timely, better services to their clients.

Streamlining these processes and policies could provide much needed assistance to both taxpayers and CPAs when disasters occur. You can find more resources at the AICPA’s Disaster Tax Relief and Casualty Loss and Disaster Relief web pages as well as the IRS’s Disaster Relief Resource Center for Tax Professionals

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