IRS Postpones Deadlines for Taxpayers in Disaster Areas

Natural disasters can cause significant challenges to individuals and entities, disrupting their daily lives and complicating financial responsibilities. To ease the burden, the IRS frequently provides filing and payment postponements to taxpayers residing within federally declared disaster areas. These measures grant taxpayers more time to recover from the disasters and meet their filing and payment obligations without facing hefty penalties and interest. This relief can be a boon to impacted taxpayers, but they need to make sure they qualify for the relief and meet the postponed deadlines to avoid certain penalties.

Calendar Year 2023 Tax Filing Postponements

Throughout 2024, the IRS announced dozens of filing and/or payment postponements for 2023 calendar year taxpayers effected by federally declared disasters. Taxpayers residing in sixteen states and territories who received an extension to file their 2023 returns before the disaster have until February 3, 2025, to file these returns. This includes taxpayers in the entire states of Louisiana and Vermont, all of Puerto Rico and the Virgin Islands and parts of Arizona, Connecticut, Illinois, Kentucky, Minnesota, Missouri, Montana, New York, Pennsylvania, South Dakota, Texas and Washington state. There is no postponement of the obligation to pay for 2023 in these states and territories, as the tax was already due before the disasters occurred.

Certain taxpayers in an additional 10 states have until May 1, 2025, to file their 2023 returns (there is again no postponement to pay tax with respect to the 2023 tax year). This includes, among others, taxpayers impacted by hurricanes Helene and Milton, including the entire states of Alabama, Florida, Georgia, North Carolina, and South Carolina, and parts of Alaska, New Mexico, Tennessee, Virginia, and West Virginia. 

The above postponements are automatically granted to taxpayers whose address of record is within a disaster area. In addition, the IRS will work with taxpayers who live outside the disaster area but whose records needed to file are located within a federally declared disaster area. 

Relief for Those Impacted by the Los Angeles Wildfires

On January 10, 2025, the y have until October 15, 2025, to file and pay tax with respect to certain 2024 tax filings. These include:

• Quarterly estimated tax payments for the first three quarters of 2025;
• Individual income tax returns and payments, originally due on April 15, 2025;
• Calendar-year S-corporation and partnership returns, originally due on March 17, 2025, and
• Tax-exempt organization return filings, originally due on May 15, 2025.

Additionally, quarterly payroll and excise tax return filings due January 31, April 30, and July 31, 2025, are included in the postponement period. Currently, only affected taxpayers in Los Angeles County have been granted relief.

Eligibility Requirements

To determine eligibility for disaster relief, taxpayers are instructed to review the qualification provisions in Treas. Reg. Sec. 301.7508A-1(d). Treas. Reg. Sec. 301.7508A-1(d)(1) defines “affected taxpayer” as any individual, business entity, or sole proprietorship with a principal residence or place of business in a “covered disaster area.” “Affected taxpayer” further includes any individual, business, estate, or trust with tax records necessary to file a return maintained within the covered disaster area.

Often, taxpayers will satisfy this definition if their tax preparer or bookkeeper is located within a covered disaster area, even if the taxpayer themself is not. Treas. Reg. 301.7508A-1(d)(2) defines “covered disaster area” as those areas that the President has determined require federal assistance. While relief will apply automatically to those with an address of record within a covered disaster area, taxpayers seeking relief under the records exception must proactively reach out to the IRS, or they may receive a penalty notice.

Filing a Return under Disaster Relief

Taxpayers filing returns based on disaster relief provisions may receive notices from the IRS if the taxpayer’s address of record does not clearly demonstrate that they qualify for relief. If a taxpayer satisfies the definition of an affected taxpayer under Treas. Reg. Sec. 301.7508A-1(d)(1)(iv) due to their records being located within a covered disaster area, the IRS encourages the taxpayer to proactively contact the IRS to explain their circumstances. Taxpayers who fail to do so may receive late filing or late payment penalty notices from the IRS based on the date of their filing or payment.

Responding to Notices Received

Despite best efforts, affected taxpayers may still receive late filing or late payment penalty notices from the IRS. Even if you qualify for disaster relief, it is imperative not to ignore the notice and to respond accordingly. Failure to do so could result in interest charges and potential liens and levy actions. The IRS provides disaster relief assistance to allow affected taxpayers more time to file their tax returns and sometimes pay their federal income tax. While helpful to many, it is imperative that taxpayers understand whether they qualify for relief. To determine if you qualify for a postponement, or if you received an erroneous penalty notice despite qualifying, contact an EisnerAmper tax professional.