Tax Relief for Some Impacted by TS Fay

Floridians in disaster-declared counties affected by Tropical Storm Fay may be eligible for various forms of tax relief that could ease the distress of some losses.

Following severe storms and flooding on Aug. 18, Baker, Brevard, Collier, Duval, Glades, Hendry, Jefferson, Lake, Lee, Leon, Marion, Nassau, Okeechobee, Orange, Polk, St. Lucie, Seminole, Volusia and Wakulla counties were designated as presidential disaster areas that qualify for Individual Assistance. As a result, the U.S. Internal Revenue Service (IRS) is postponing until Nov. 17 certain deadlines for taxpayers who reside or have a business in the disaster areas. The postponement applies to return filing, tax payment and certain other time-sensitive acts otherwise due between Aug. 18, 2008 and Nov. 17, 2008.

In addition, the IRS will waive the "failure to deposit" penalties for employment and excise deposits due on or after Aug. 18 and on or before Sept. 2, as long as the deposits were made by Sept. 2. Disaster assistance grants received by applicants are not subject to income taxation and have no bearing on a person's Social Security or welfare benefits.

Taxpayers may also qualify to receive refunds from their 2007 taxes because of deductible disaster-related losses from this presidentially declared disaster. It is important to save all receipts related to disaster expenses. Details can be found on the IRS Web site, www.IRS.gov by launching a search for "Florida Tropical Storm Fay" or by calling the agency's disaster helpline, 800-TAX-FORM (1-800-829-3676) to order a copy of appropriate instructions.

Casualty losses for tax purposes generally are based on the decrease in fair market value of the property as a result of the disaster minus any insurance payments or other reimbursements received. The IRS will ask for the latest tax return, estimates of repairs, before and after photographs, appraisals or any other loss documentation.

Property owners affected by the disaster should also check with their local property appraiser about the possibility of claiming a reduction in the taxable value of property destroyed or damaged as a result of the disaster.