Tax Relief

Senators Introduce AICPA-Backed Catastrophe Tax Reduction Act

Legislature proposed a bipartisan bill in the Senate that would allow the Internal Revenue Service to postpone filing deadlines when a state-level disaster declaration is issued instead of waiting for the federal government.

The Filing Relief for Natural Disasters Act, introduced Tuesday by Sen. Catherine Cortez Masto, D-Nevada, John Kennedy, R-Louisiana, and Chris Van Hollen, D-Maryland, aims to help taxpayers in states that are state Bodies have issued facilities to provide emergency statements. The IRS is currently only empowered to postpone filing deadlines in the event of a federal disaster declared by the President, but not in the case of emergencies at the state level. The bill would expand the power of the IRS to provide tax breaks after state-declared disasters and states of emergency. It would also extend the mandatory extension of federal filing from 60 days to 120 days, which would give taxpayers additional time to file their taxes after a disaster.

Legislation comes when the Tropical Depression hits Nicholas Louisiana, Texas and other Gulf Coast states just weeks after Hurricane Ida. Hurricanes, tropical storms and forest fires have wreaked havoc across the country as climate change accelerates. The IRS has been busy providing tax breaks this year and last as a result of natural disasters and the COFIC-19 pandemic.

A resident walks through the floods that Hurricane Ida left in LaPlace, Louisiana on Monday, August 30, 2021.

Luke Sharrett / Bloomberg

Cortez Masto voters in Nevada were also affected, but were not always eligible for tax breaks. For example, this summer Nevada declared state emergencies for both the Tamarack and Caldor fires in the west, which displaced thousands of Nevada families, drained resources from Nevada’s firefighters, and adversely affected Nevada’s economy. But under current law, Nevada residents are not eligible for tax breaks on these state disaster statements. Their legislation would help them get assistance with recovery from forest fires and other natural disasters.

“Nevadans should not be denied tax breaks after forest fires just because the state does not receive a state-approved disaster declaration,” Cortez Masto said in a statement on Tuesday. “Nevadans across the state have been hit by major forest fires in the west, and my legislation would ensure that any taxpayer feeling the effects of a natural disaster has access to important tax breaks to help our communities recover.”

Kennedy, who is teaming up with her across the aisle, has seen a number of disasters that hit his home state, including Hurricane Kaatrina in 2005, the help we can get in recovery, and that includes extensions for filing taxes, “Kennedy said in a statement. “Because Louisiana cannot always rely on Washington to provide us with the help we need when we need it, this bill would ensure that Louisians get the tax increases they need to rebuild after our state declares a natural disaster. I am grateful to be working with Sen. Cortez Masto in this effort. “

Maryland was also hit by remains of Ida. “If a disaster strikes, Marylanders need immediate financial flexibility to rebuild and recover,” Van Hollen said in a statement. “This legislation will help ensure that – even if no federal disaster has been declared. I will work with my colleagues to get this sensible, bipartisan law passed. “

The Filing Relief for Natural Disasters Act would allow the governor of a state or territory to extend a federal tax filing deadline in the event of a state-declared emergency or disaster, which happens automatically for state-declared disasters. The extension of these powers to states enables them to provide assistance regardless of the involvement of the federal government in an emergency or natural disaster. The law would also extend the mandatory extension of federal filing from 60 days to 120 days.

The bill is supported by the American Institute of CPAs. “AICPA has been a vocal advocate of expanded disaster tax relief for many years, and we are grateful to Senator Cortez Masto for her leadership on this issue,” said Edward Karl, AICPA’s vice president of taxation, in a statement Wednesday. “It is often difficult for the IRS to act quickly after a natural disaster to offer tax breaks. Senator Cortez Masto recognizes that natural disaster victims don’t have to worry about tax filing deadlines in an already stressful time and is committed to providing accelerated tax breaks for these taxpayers. “

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