Taxes: Why the IRS Sent Incorrect Notices to Taxpayers Impacted by Natural Disasters

(Yahoo!Finance) - The IRS has incorrectly sent auto-generated payment-due notices to taxpayers impacted by natural disasters, triggering confusion among taxpayers and preparers.

The federal tax-filing date was April 18, but due to wildfires, floods, and tornadoes, taxpayers impacted by areas with declared disasters by the Federal Emergency Management Agency (FEMA) had their filing date extended, depending on the state, until July, August, or October.

“The IRS did send an apology press release and there is a Notice 1155-G, which explains disaster relief from the IRS, but of course, none of this is clear and distressing to taxpayers,” Lawrence (Larry) Pon, a certified public accountant, told Yahoo Finance.

“Errors like these are obviously really confusing for any household,” Joanna Ain, associate director of policy at Prosperity Now, told Yahoo Finance. “The decade of budget cuts to the IRS needs to be rectified so that the IRS can continue to build up their customer service.”

Taxpayers can ignore the notice but need to pay attention to the deadline for their state because the filing extension is not the same for every taxpayer impacted by a natural disaster.

The deadlines vary according to states (see below): July 31, August 15, October 16, and November 15.

The advice: “Taxpayers who have experienced disasters should go to the IRS newsroom to receive the latest information,” Tom O’Saben, director of tax content and government relations for the National Association of Tax Professionals, told Yahoo Finance. “We are in extension season and also the most volatile weather season, so it’s entirely likely that additional disasters will occur before the October 16, 2023 extension deadline.”

In order to qualify for the extension, taxpayers must live in counties that FEMA declared as disaster areas.

The following are the states affected and the extended 2023 filing deadlines:

MississippiTennesseeIndiana, and Arkansas taxpayers impacted by storms and tornadoes have until July 31 to file.

Florida taxpayers impacted by storms have until August 15.

Georgia and Alabama taxpayers impacted by storms and tornadoes have until October 16.

California taxpayers affected by winter storms, wildfires, flooding, and mudslides have various deadlines.

“It is a little unclear as described on the IRS and CA websites…for mudslides that began in February the extended due date is August 15th per CA-2023-04, but for mudslides that happened in 2022 the extended due date is October 16, 2023,” Dwight Nakata, a certified public accountant at YNCPAs in Artesia, California, said. “We do not think the extended date is November 15, 2023 for mudslides or that is our take for now.”

Vermont flooding victims have until November 15 to file.

Questions? Reach out to a tax professional or tax clinic like the Volunteer Income Tax Assistance (VITA). The IRS has requested taxpayers neither call nor write, reflecting staff shortages. To find a VITA location near you, use the VITA site locator tool.

“Taxpayers should have their tax advisor review the correspondence and help them decide if any action is needed [because] some cases may need to clarify the original IRS position about disaster zones and request an abatement of the penalty,” said Nakata.

Ronda is a personal finance senior reporter for Yahoo Finance and attorney with experience in law, insurance, education, and government.

By Ronda Lee


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