Update – 7/13/2016
As expected, the President did declare a Federal emergency for our area, so FEMA is now in charge. The IRS will offer an automatic extension (including waiver of late penalties) until September 1st. Automatic means that there is no need to file any special form or call the IRS, unless for some reason their system will not recognize your tax return as automatically extended.
The extension covers all deadlines falling between April 17 and September 1:
- filing tax returns
- paying balance due
- making quarterly estimated payments
- making payroll deposits
- and more
The IRS announcement is predictably convoluted. Here is a translation of the IRS announcement into common English.
Important caveat: only these counties are covered by the Federal disaster area
- Anderson
- Austin
- Cherokee
- Colorado
- Fayette
- Fort Bend
- Grimes
- Harris
- Liberty
- Montgomery
- Parker
- San Jacinto
- Smith
- Waller
- Wharton
- Wood
The interest is not specifically addressed, however it is likely that it will not be charged for the Federally designated counties.
Reported earlier – 4/20/2016 – Superseded by the above announcement
We just can’t get a break from water lately.
At least we may be able to get it from the IRS – considering that April 18 was also a major IRS deadline. Obviously, many people were forced to miss the deadline due to weather. Offices of accountants, such as ours, were closed. Banks were closed, so payments could not be made. Post offices were closed, so papers could not be mailed. Power was off, so electronic filing was unavailable. And so on.
On April 18, Texas Governor Greg Abbot declared the following counties a disaster zone:
- Austin
- Bastrop
- Fort Bend
- Colorado
- Grimes
- Harris
- Montgomery
- Waller
- Wharton
Additional counties may be added as the situation develops.
While the Governor’s declaration does not have a Federal power, the Governor’s office, along with the U.S. Senator Ted Cruz and Congressman Michael McCaul, reached out to the IRS and secured an IRS declaration that the IRS will consider waiving penalties on a case-by-case basis. This is not completely reassuring, since it requires you to specifically call the IRS and request a waiver.
However, if history is any indication, we can soon expect a FEMA declaration of the Texas disaster zone. Once FEMA issues a declaration on the Federal level, the IRS will most likely grant an automatic relief to everybody residing in the affected counties, by ZIP codes.
One caveat: The IRS relief will likely include waiving of penalties for late return submission and late payments. However, the IRS may NOT remove interest on the past-the-deadline payments. It is not currently clear whether or not the interest will be forgiven, so assume that it won’t be. So, even with the expected extensions, the sooner you pay – the less you pay! If you know you owe the IRS and can pay – do so ASAP. It will stop the add-on interest.