Congress introduces bill to provide tax relief after natural disasters

Lawmakers in the House and Senate have introduced bipartisan legislation to give the Internal Revenue Service more authority to provide tax relief for taxpayers who have to make tax payments or file their taxes after a state-declared natural disaster occurs near the deadline.

The bill, known as the Filing Relief for Natural Disasters Act, was introduced Thursday by Judy Chu, D-Calif., and John Katko, R-N.Y., in the House and by David Perdue, R-Ga., and Catherine Cortez Masto, D-Nev., in the Senate. Under current law, the IRS has the authority to postpone certain filing deadlines in the wake of a presidentially declared disaster. But that declaration typically comes several days or weeks after a state-level emergency is declared. That can delay the IRS’s ability to provide federal tax relief to affected businesses and disaster victims. The Filing Relief for Natural Disasters Act would extend the IRS’s limited authority to state-declared disasters and states of emergency.

“When a natural disaster strikes, ruining homes, communities, and lives, the last thing a survivor should be worried about is filing their taxes,” Chu said in a statement. “The IRS has the ability to grant deadline extensions. Unfortunately, that only applies to federally declared emergencies, which are often declared days or weeks after a governor declares a state-level emergency. That means taxpayers have to waste their valuable time and resources filing for penalty waivers and extensions. Today, I’m proud to introduce the Filing Relief for Natural Disasters Act, a bipartisan, bicameral bill that fixes this problem by extending that IRS authority to state-declared disasters and states of emergency as well.”

Patrick T. Fallon/Bloomberg

Katko also expressed his support. “American families and businesses experience numerous hardships in the wake of devastation caused by natural disasters,” he said in a statement. “I am proud to join Congresswoman Chu in introducing legislation that would ensure tax deadlines are not among the many concerns facing disaster-impacted communities. This commonsense bill would provide necessary relief to struggling Americans by granting the IRS the authority to quickly postpone tax deadlines during state-declared emergencies.”

The American Institute of CPAs supports the legislation and lobbied for it during its Spring Meeting of Council in Washington, D.C., this week (see CPAs lobby Congress on tax and accounting issues). The AICPA thanked the four lawmakers Friday for introducing the legislation. “The current statute requires the Internal Revenue Service to wait for a federal disaster declaration, which cannot happen until after the disaster occurs, in order to grant deadline extensions,” said AICPA vice president of taxation Edward S. Karl in a press release. “The governors of affected states have more discretion to act quickly to issue official disaster declarations, while it may be days or weeks after the state governor’s declaration before the federal disaster declaration is made.”

He pointed out that because there are many due dates throughout the year, disasters often happen shortly before or after deadlines, so waiting for the IRS to issue tax relief causes taxpayers and tax practitioners unnecessary stress when their homes, offices and records could have been destroyed or rendered inaccessible.

“We urge Congress to swiftly approve this legislation so that the IRS is allowed to offer disaster victims the certainty they need as soon as possible,” Karl added.

He noted that the legislation doesn’t eliminate the need for Congress to implement a permanent disaster tax relief bill, for which the accounting profession has long advocated, so taxpayers are assured fair treatment in a timely way.