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IRS & Massachusetts Extending Certain Filing and Payment Deadlines

The Internal Revenue Service has announced that it is postponing until May 11, 2010 certain deadlines for taxpayers who reside or have business in the presidentially-declared disaster areas in Massachusetts due to severe storms and flooding beginning March 12, 2010. This includes the April 15 deadline for filing 2009 individual income tax returns, making income tax payments, and making 2009 contributions to an individual retirement account (IRA). In addition, the IRS will waive the failure to deposit penalties for employment excise deposit due on or after March 12, 2010 and on or before March 29, 2010, as long as the deposits were made by March 29, 2010.

In response to the IRS’ tax deadline extension, the Massachusetts Department of Revenue has announced that the new filing deadline for state tax returns will be midnight May 11, 2010.

Federally-declared disaster areas include Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk, and Worcester Counties.

Affected Taxpayers

The affected taxpayers are individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet certain tax deadlines are in the covered disaster area, are also entitled to relief. Also, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Tax Relief

Affected taxpayers have until May 11, 2010 to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after March 12, 2010, and on or before May 11, 2010. Affected taxpayers also have until May 11, 2010 to perform other time-sensitive actions that are due to be performed on or after March 12 and on or before May 11.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Form 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise deposits due on or after March 12, 2010, and on or before March 29, 2010, provided the taxpayer made these deposits by March 29, 2010.

Casualty Losses

Affected taxpayers in a federally-declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation ?Massachusetts/Severe Storms and Flooding? at the top of the form so that the IRS can expedite the processing of the refund.

Abatement Requests

An affected taxpayer who receives a penalty notice from the IRS may request the IRS to abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

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