The Internal Revenue Service (IRS) announced on October 5 in release IR-2022-173 that Hurricane Ian victims throughout both North Carolina and South Carolina will now have until February 15, 2023, to file various federal individual and business tax returns and make certain tax payments. This tax relief is similar to relief that was previously announced on September 29 for all taxpayers living in Florida.  The tax filing and payment postponement period starts on September 25, 2022 for all South Carolina taxpayers and September 28 for all North Carolina taxpayers.

Individuals and businesses anywhere in both the Carolinas and Florida will qualify for the new tax relief as the entire states were designated by the Federal Emergency Management Agency (FEMA) in presidential disaster declarations on October 1 in the Carolinas and September 29 in Florida.

The February 15, 2023 deadline applies to several common tax filings and payments for individuals and businesses:

• Individuals with a valid extension to file their 2021 return due to run out on October 17, 2022 (any tax payments related to these 2021 returns that were originally due on April 18, 2022, are not eligible for this relief and will be subject to the normal penalties and interest calculations)
• The individual fourth quarter estimated tax payments normally due on January 17, 2023
• The quarterly payroll and excise tax returns normally due on October 31, 2022, and January 31, 2023
• Businesses with an original or extended due date, including calendar-year corporations with 2021 extensions due to run out on October 17, 2022 (any tax payments related to these calendar-year 2021 corporate returns that were originally due on April 18, 2022 are not eligible for this relief and will be subject to the normal penalties and interest calculations)
• Tax-exempt organizations, including for 2021 calendar-year returns with extensions due to run out on November 15, 2022

Tax relief is also available for payroll and excise tax deposits due during a shorter eligibility period.  In South Carolina, penalties on payroll and excise tax deposits due on or after September 25, 2022, and before October 11, 2022, will be abated as long as the tax deposits are made by October 11, 2022. In North Carolina, penalties on payroll and excise tax deposits due on or after September 28, 2022, and before October 13, 2022, will be abated as long as the tax deposits are made by October 13, 2022.

The IRS will automatically provide filing and penalty relief to any taxpayer with an IRS address of record located in these disaster areas. There is no need to contact the IRS to request the relief in advance if your individual or business tax account address is in the Carolinas or Florida.   In the event a taxpayer does receive a late filing or late payment penalty notice from the IRS with an original or extended filing due date falling within the postponement period, they should contact the IRS directly to have the penalty abated.

The IRS will also work with any taxpayer or business located outside these disaster areas but whose records necessary to meet a deadline occurring during the postponement period are located in the affected areas. Taxpayers qualifying for relief who live outside the disaster areas will need to contact the IRS directly at 866-562-5227. This tax relief is also eligible for workers assisting with Hurricane Ian relief activities who are affiliated with a recognized government or philanthropic organization.

Further hurricane disaster relief tax updates can be found on the IRS disaster relief page including options for reporting uninsured or unreimbursed disaster-related losses on 2021 or 2022 individual and business tax returns.

At this time we are waiting on guidance from both the North Carolina and South Carolina Departments of Revenue on if they will also issue similar Hurricane Ian tax relief and allow the new February 15, 2023 deadline.

PBMares clients with questions about Hurricane Ian tax relief and the new February 15, 2023 tax deadline or reporting uninsured disaster losses can reach out to Charles Dean Smith, Jr., CPA and Tax Partner in the firm’s New Bern, NC office.