FAQs About Your Tax Relief

Where can I get information related to Gulf Opportunity Zone Act of 2005 and the Katrina Emergency Tax Relief Act of 2005?

The Gulf Opportunity Zone Act of 2005, in general, expands the provisions of the Katrina Emergency Tax Relief Act of 2005 to those affected by Hurricanes Rita and Wilma as well as Katrina. These two new laws provide certain tax breaks to help victims of the storms. The new laws alter the tax code to help individuals who suffered losses as a result of the hurricanes and to make it easier for individuals and companies to engage in charity to benefit those affected by the hurricanes.

More information is available at Fact Sheet 2006-12, Tax Law Changes Related to Hurricanes Katrina, Rita and Wilma, and the KETRA page.

Do I need to let the IRS know I'm affected by Hurricane Katrina to receive relief?

Taxpayers affected by the hurricane may be eligible for tax relief, regardless of where they live. Deadlines for affected taxpayers to file any returns, pay any taxes and perform other time-sensitive acts have been postponed to Feb. 28, 2006.

In the hardest-hit areas — those designated by FEMA as “individual assistance areas” — the tax relief will be automatic, and you won’t need to do anything to get the extensions and other relief available. In areas where FEMA has determined damage is more isolated -- designated as “public assistance area,” you will need to identify yourself as hurricane victims when filing with the IRS.

To help identify as many affected taxpayers as possible, the IRS encourages all taxpayers affected by Hurricane Katrina to write “Hurricane Katrina” in red ink at the top of their forms or any other documents filed with the IRS.

What areas are covered by the disaster relief?

Areas in four states are eligible for tax relief:

Taxpayers will receive automatic relief in 31 Louisiana parishes designated for individual assistance: Acadia, Ascension, Assumption, Calcasieu, Cameron, East Baton Rouge, East Feliciana, Iberia, Iberville, Jefferson, Jefferson Davis, Lafayette, Lafourche, Livingston, Orleans, Pointe Coupee, Plaquemines, St. Bernard, St. Charles, St. Helena, St. James, St. John, St. Mary, St. Martin, St. Tammany, Tangipahoa, Terrebonne, Vermilion, Washington, West Baton Rouge and West Feliciana

Taxpayers will receive tax relief if they identify themselves as being impacted by Hurricane Katrina and they live in these 33 Louisiana parishes designated for public assistance: Allen, Avoyelles, Beauregard, Bienville, Bossier, Caddo, Caldwell, Catahoula, Claiborne, Concordia, Desoto, East Carroll, Evangeline, Franklin, Grant, Jackson, LaSalle, Lincoln, Madison, Morehouse, Natchitoches, Ouachita, Rapides, Red River, Richland, Sabine, St. Landry, Tensas, Union, Vernon, Webster, West Carroll and Winn.

Taxpayers will receive automatic relief in 47 Mississippi counties designated for individual assistance: Adams, Amite, Attala, Claiborne, Choctow, Clarke, Copiah, Covington, Franklin, Forrest, George, Greene, Hancock, Harrison, Hinds, Jackson, Jasper, Jefferson, Jefferson Davis, Jones, Kemper, Lamar, Lauderdale, Lawrence, Leake, Lincoln, Lowndes, Madison, Marion, Neshoba, Newton, Noxubee, Oktibbeha, Pearl River, Perry, Pike, Rankin, Scott, Simpson, Smith, Stone, Walthall, Warren, Wayne, Wilkinson, Winston and Yazoo.

Taxpayers will receive tax relief if they identify themselves as being impacted by Hurricane Katrina and they live in these 35 Mississippi counties designated for public assistance: Alcorn, Benton, Bolivar, Calhoun, Carroll, Chickasaw, Clay, Coahoma, DeSoto, Grenada, Holmes, Humphreys, Issaquena, Itawamba, Lafayette, Leflore, Lee, Marshall, Monroe, Montgomery, Panola, Pontotoc, Prentiss, Quitman, Sharkey, Sunflower, Tallahatchie, Tate, Tippah, Tishomingo, Tunica, Union, Washington, Webster and Yalobusha.

Taxpayers will receive automatic relief in 10 Alabama counties designated for individual assistance: Baldwin, Choctaw, Clarke, Greene, Hale, Mobile, Pickens, Sumter, Tuscaloosa and Washington.

Taxpayers will receive tax relief if they identify themselves as being impacted by Hurricane Katrina and they live in these 12 counties eligible for public assistance: Bibb, Colbert, Cullman, Jefferson, Lamar, Lauderdale, Marengo, Marion, Monroe, Perry, Wilcox and Winston.

Taxpayers will receive tax relief if they identify themselves as being impacted by Hurricane Katrina and they live in these 11 Florida counties designated for public assistance: Monroe, Broward, Miami-Dade, Bay, Collier, Escambia, Franklin, Gulf, Okaloosa, Santa Rosa and Walton.

What if I live in an area outside these four states?

Relief Workers
All workers assisting in the relief activities in the covered disaster areas are eligible for relief whether or not they are affiliated with a recognized government or philanthropic organization. These people should also mark their appropriate forms with “Hurricane Katrina” written in red ink.

Others Affected by Katrina
The IRS will work with any taxpayer who resides elsewhere but whose books, records or tax professional are located in the areas affected by Hurricane Katrina. These taxpayers will need to identify themselves as hurricane victims when filling out their forms by marking “Hurricane Katrina” in red ink.

Can I contact the IRS for tax-related disaster assistance?

Victims of Hurricane Katrina can call the IRS toll-free disaster hotline at 1-866-562-5227 for assistance.

Are tax relief assistance payments taxable?

Usually, no.

People in a Presidentially-declared disaster area who receive grants from state programs, charitable organizations or employers to cover medical, transportation or temporary housing expenses do not include these grants in their income.

What if I have a tax return due?

The IRS is giving people and businesses more time to file their tax returns.

Taxpayers affected by the hurricane may be eligible for tax relief, regardless of where they live. Deadlines for affected taxpayers to file any returns, pay any taxes and perform other time-sensitive acts have been postponed to Feb. 28, 2006.

Generally speaking, those affected by Hurricane Katrina now have until Feb. 28, 2006, to file a tax return. In Alabama, Louisiana and Mississippi, this relief applies to any return due on or after Aug. 29, 2005. In Florida, where Katrina hit first, the date is on or after Aug. 24, 2005. Both individuals and businesses qualify for this special relief.

If affected, all you need to do is to file a return by Feb. 28, 2006. If you haven’t already paid any tax due, pay it with your return. No interest or late filing or paying penalties will be due for the period Aug. 29, 2005 (Aug. 24, 2005 for Florida), though Feb. 28, 2006, if the return is filed and all taxes are paid, in full, by Feb. 28, 2006.

What if I have difficulty getting a copy of my W-2?

Some taxpayers affected by the hurricanes may have difficulty obtaining 2005 Form W-2, Wage and Tax Statement, and other 2005 information documents. For more information, see Fact Sheet 2006-8, Substitute Forms W-2 for Hurricane Victims.

How do I reconstruct records that I lost?

Reconstructing records after a disaster may be essential for tax purposes, getting federal assistance or insurance reimbursement. Records that you need to prove your loss may have been damaged or destroyed in a casualty. More information is available in Fact Sheet 2006-7, Reconstructing Your Records.

Do I have more time to make my quarterly estimated tax payment?

Yes. You have until Feb. 28, 2006, to make this payment. This includes the third quarter estimated tax payment ( Form 1040ES) normally due on September 15.

Do businesses have more time to make payroll tax deposits?

Yes. Businesses will have until Feb. 28, 2006, to make federal tax deposit (FTD) payments without incurring a late deposit penalty. This relief applies to any deposit originally due on or after Aug. 29, 2005.

This relief applies to employers who deposit social security, Medicare and federal income taxes withheld from employee paychecks. Businesses who deposit federal excise taxes are also eligible for this relief.

Where can I learn more about what other "time-sensitive" actions receive relief?

The IRS is giving affected taxpayers until Feb. 28, 2006 to perform other time-sensitive actions described in Treasury Regulation § 301.7508A-1(c)(1) (PDF 160KB, 10 pages) Revenue Procedure 2005-27 (PDF 492KB, 38 pages).

My home was damaged by the hurricane, and I don’t have insurance. Do I qualify for any special tax relief?

If you suffered major damage, you may be able to deduct some of your loss on your federal income tax return. Only losses not covered by insurance or other reimbursements are eligible. Because of the way this deduction is figured, only major losses normally result in tax savings. Tax Topic 515 has more information about losses and theft.

Losses on business or rental property also qualify for tax relief. Different rules apply to figuring this deduction.

I heard that I can choose when to claim losses to property located in a disaster area. Is that true?

Yes. There is a special rule that applies to deductible losses on property located in a Presidentially-declared disaster area. Under this rule, you can choose to claim your losses on your 2004 return or wait until the end of the year and claim them on your 2005 return.

I want to claim my disaster losses on my 2004 return. Since I already filed my 2004 return, how do I do that?

You do not have to fill out your entire 2004 return all over again. Instead, file an amended return using Form 1040X. You use this form to claim your losses and show the items that need to be changed on your original return. Tax Topic 308 explains how to file an amended return.

What other kind of relief is available?

The IRS will waive the usual fees and expedite requests for copies of previously-filed tax returns for people who need them to apply for benefits or to file amended returns claiming disaster-related losses. Write the words “Hurricane Katrina” in red at the top of Form 4506, “Request for Copy of Tax Return,” or Form 4506-T, “Request for Transcript of Tax Return.”

People who are contacted by the IRS on a collection or examination matter should explain how the disaster affects them so that the IRS can provide appropriate consideration to their case.

Where can I get more information about the losses I've suffered?

Publication 2194, Disaster Losses Kit for Individuals ( PDF 860KB, 100 pages). Attention: Publication 2194 is being updated with new provisions of the Katrina Emergency Tax Relief Act of 2005. For information on these provisions, see News Release 2005-119, New Law Eases Loss Limitations for Katrina Victims

Publication 2194B, Disaster Losses Kit for Businesses ( PDF 943KB, 78 pages) — Contain various IRS publications and forms related to claiming disaster losses.

What if I've changed addresses or have an undelivered refund?

You should contact the IRS if you're a Hurricane Katrina victim awaiting a tax refund that hasn't been received or to report a change of address.

A taxpayer expecting a refund check at an address where he or she no longer resides or who has not received an expected check because of mail delivery problems should contact the IRS disaster hotline at 1-866-562-5227 or the refund hotline at 1-800-829-1954.

In order to authenticate taxpayer identity, the IRS will ask callers to provide information from their last federal tax return, including name, address, taxpayer identification number and filing status. Taxpayers will also need to provide a current address where they can receive mail and a current telephone number.

How can I protect myself from falling victim to possible Hurricane Katrina-related scams?

IRS cautions hurricane victims and people wishing to make donations to disaster-relief charities to avoid unscrupulous scam artists. While the IRS does not endorse any specific charity, you can use the IRS.gov search feature to find qualified charities for tax deduction purposes. Some organizations, such as churches and governments, may be qualified even though they are not listed. Since scam artists may falsely use legitimate charity names and or cloned Web sites, always be extremely cautious in giving out personal and financial information, such as Social Security or bank account numbers. Scam artists can use this information to steal your identity or gain access to your financial assets

The IRS has also established a toll-free, disaster assistance phone number, 1-866-562-5227, specifically for hurricane victims. If you are solicited by anyone, even someone claiming to be from the IRS, with promises of tax relief, tax refunds or disaster assistance, call the IRS’s disaster assistance number to verify the legitimacy of the solicitation before giving any personal or financial information to the solicitor.

The IRS does not ask for personal identifying or financial information via e-mail or in unsolicited mail or telephone calls.