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IRS Announces Tax Relief for Victims of Hurricane Maria in U.S. Virgin Islands

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Treasury Internal Revenue Service
Treasury Internal Revenue Service

Victims of Hurricane Maria that took place beginning on Sept. 16 in parts of the U.S. Virgin Islands may qualify for tax relief from the Internal Revenue Service.

The president has declared that a major disaster exists in the territory. Following the recent disaster declaration issued by the Federal Emergency Management Agency (FEMA), the IRS announced today that affected taxpayers in the V.I. will receive tax relief.

Individuals who reside or have a business on St. Croix, St. John and St. Thomas may qualify for tax relief.

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The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Sept. 16, 2017, and before Jan. 31, 2018, are granted additional time to file through Jan. 31, 2018.

With some exceptions, many of these deadlines were postponed by the IRS following the disaster declaration for Hurricane Irma. This includes taxpayers who had a valid extension to file their 2016 return that was due to run out on Oct. 16, 2017. It also includes the quarterly estimated income tax payment originally due on Jan. 16, 2018, and the quarterly payroll and excise tax returns normally due on Oct. 31. 2017.

Tax-exempt organizations that operate on a calendar-year basis and had an automatic extension due to run out on Nov. 15, 2017, are also included

The tax deposit penalty relief period for Hurricane Irma overlaps the period for Hurricane Maria. For that reason, penalties on payroll and excise tax deposits due on or after Sept. 5, 2017, and before Oct. 2, 2017, will now be abated if the deposits are made by Oct. 2, 2017.

If an affected taxpayer receives a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or a deposit due date that falls within the postponement period, the taxpayer should call the telephone number on the notice to have the IRS abate the penalty.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 866-562-5227 to request this tax relief.

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 the year in which the event occurred, or the prior year. See Publication 547 for details.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on a 2016 return should put the Disaster Designation, “U.S. Virgin Islands, Hurricane Maria” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation “U.S. Virgin Islands, Hurricane Maria.” in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case. Taxpayers may download forms and publications from the official IRS Web site, www.irs.gov, or order them by calling 800-829-3676. The IRS toll-free number for general tax questions is 800-829-1040.

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