Tax Relief for Disaster Victims in Louisiana, Massachusetts, Maine, Florida, South Carolina, Georgia, Hawaii, Illinois, Mississippi, and Vermont
The IRS has issued several notices in the past few months regarding relief available to victims of disasters in Louisiana, Massachusetts, Maine, Florida, South Carolina, Georgia, Hawaii, Illinois, Mississippi & Vermont. See the IRS Notices at the preceding links. A taxpayer involved in a 1031 exchange may qualify for relief under either Section 6 or Section 17 of Revenue Procedure 2018-58 (the “Rev. Proc.”), as described below, if they are a victim of one of these disasters.
An Affected Taxpayer is an individual who lives, or a business with a principal place of business located in, the applicable Covered Disaster Area from the below list. Affected Taxpayers are entitled to relief in the form of an extension regardless of where their relinquished property or replacement property is located in their exchange.
Affected Taxpayers have two options for relief. First, under Section 6 of the Rev. Proc., an Affected Taxpayer whose 45th and/or 180th day deadline falls on or after the listed Disaster Date, but before the applicable Extension Date, may extend that deadline to the Extension Date.
Alternatively, under Section 17 of the Rev. Proc., an Affected Taxpayer whose relinquished property was transferred prior to the Disaster Date may extend any deadline falling on or after the Disaster Date by the later of 120 days or to the Extension Date.
Taxpayers who are not Affected Taxpayers, but who otherwise have difficulty meeting their 45th or 180th day deadlines, may also be eligible for the Section 17 extension relief of either 120 days or to the Extension Date. For example, the replacement property could be located in the Covered Disaster Area and all parties there are prevented from being able to consummate a closing by the 180th day. In such a case, even though the Exchangor purchasing the property does not reside in the Covered Disaster Area, they are able to make use of the extension so that they can acquire the property and complete their exchange. The full text of the Rev. Proc., including all circumstances in which Section 17 extension relief can be granted to a non-Affected Taxpayer, can be viewed here: rp-18-58.pdf (irs.gov). Additionally, any 45th day that fell prior to the Disaster Date is also extended if the taxpayer’s identified replacement property is substantially damaged by the disaster.
Taxpayers should always consult in detail with their tax advisors when determining whether they are eligible for and what steps must be taken to utilize an extension due to a disaster. It is also important to check with your applicable taxing authorities whether on a state or local level, these extensions will be honored for any state-specific tax deadlines to be met.
Seawater Intrusion in Louisiana
Disaster Date: September 20, 2023
Extension Date: February 15, 2024
Covered Disaster Area: Jefferson, Orleans, Plaquemines, and St. Bernard parishes in Louisiana.
Hurricane Lee in Massachusetts and Maine
Disaster Date: September 15, 2023
Extension Date: February 15, 2024
Covered Disaster Area: Barnstable, Berkshire, Bristol, Dukes, Essex, Franklin, Hampden, Hampshire, Middlesex, Nantucket, Norfolk, Plymouth, Suffolk, and Worcester counties in Massachusetts; Androscoggin, Aroostook, Cumberland, Franklin, Hancock, Kennebec, Knox, Lincoln, Oxford, Penobscot, Piscataquis, Sagadahoc, Somerset, Waldo, Washington, and York counties in Maine.
Hurricane Idalia in Florida, South Carolina, and Georgia
Disaster Date: August 27, 2023 (Florida & South Carolina)
August 30, 2023 (Georgia)
Extension Date: February 15, 2024
Covered Disaster Area: Alachua, Baker, Bay, Bradford, Calhoun, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Franklin, Gadsden, Gilchrist, Gulf, Hamilton, Hardee, Hernando, Hillsborough, Jefferson, Lafayette, Lake, Lee, Leon, Levy, Liberty, Madison, Manatee, Marion, Nassau, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, Sumter, Suwannee, Taylor, Union, Volusia and Wakulla Counties in Florida; All of South Carolina; and Appling, Atkinson, Bacon, Berrien, Brantley, Brooks, Bulloch, Camden, Candler, Charlton, Clinch, Coffee, Colquitt, Cook, Echols, Emanuel, Glynn, Jeff Davis, Jenkins, Lanier, Lowndes, Pierce, Screven, Tattnall, Thomas, Tift, Ware and Wayne counties in Georgia.
Hawaii Wildfires
Disaster Date: August 8, 2023.
Extension Date: February 15, 2024
Covered Disaster Area: Maui and Hawaii Counties in Hawaii.
Illinois Severe Storms and Flooding
Disaster Date: June 29, 2023
Extension Date: October 31, 2023
Covered Disaster Area: Cook County, Illinois.
Mississippi Severe Storms, Straight-Line Winds, and Tornadoes
Disaster Date: June 14, 2023 to June 19, 2023
Extension Date: October 16, 2023
Covered Disaster Area: Claiborne, Copiah, Covington, Jackson, Jasper, Jefferson, Jefferson Davis, Lawrence, Leake, Neshoba, Newton, Rankin, Scott, Simpson, Smith and Wayne Counties and the Mississippi Choctaw Indian Reservation in Mississippi.
Vermont Flooding
Disaster Date: July 7, 2023
Extension Date: November 15, 2023
Covered Disaster Area: All of Vermont.
Be aware that other counties, parishes or states may be added to the Covered Disaster Areas, and the extension dates may be extended again from time to time, so it is recommended to periodically check the IRS website for updates.
If you believe you may be entitled to an extension for one of the above disasters, we strongly recommend that you speak with your tax professional for further guidance. If you do qualify for an extension, contact your exchange officer so that they’re aware that your deadline(s) will be changing.
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