Fall is upon us and we are rapidly approaching the holiday season. This year’s holidays will
certainly be a bit different with the continuing pandemic, but we wish everyone the very best holiday wishes.
This month we feature taxpayer relief information in the event of a disaster and taxpayer rights pursuant to an IRS inquiry.
Taxpayer relief from the IRS is available post-disaster.
What happens after a disaster that leads to taxpayer relief?
No matter how devastating a disaster is, before the IRS can authorize any tax relief, FEMA must issue a major disaster declaration and identify areas qualifying for their Individual Assistance program.
Here's a list of tax-related things that usually happen after a major disaster strikes:
The IRS gives taxpayers more time to file and pay.
Taxpayers whose address of record is located in an area identified by FEMA for their Individual Assistance program will automatically receive extra time from the IRS to file returns and pay taxes.
The IRS's disaster assistance page provides disaster updates and links to resources.
Information is usually available on the IRS Twitter account as well. Taxpayers can also call the agency’s disaster line at 866-532-5227 with questions.
Taxpayers can qualify for a casualty loss tax deduction.
People who have damaged or lost property due to a federally declared disaster may qualify to claim a casualty loss deduction. They can claim this on their current or prior-year tax return. This may result in a larger refund.
People can apply for a disaster loan or grant. The Small Business Administration offers financial help to business owners, homeowners and renters. This help is for those in a federally declared disaster area. To qualify, a taxpayer must have filed all required tax returns.
Taxpayers might need a tax return transcript.
Individuals who need a tax transcript to support their disaster claims can obtain free transcripts by using Get Transcript to access their transcripts immediately online or to request mail delivery. (They can also call 800-908-9946 to request mail delivery or submit Form 4506-T, Request for Transcript of Tax Return).
Individuals who need a copy of their tax return, should file Form 4506, Request for Copy of Tax Return. The IRS waives the usual fees and expedites requests for copies of tax returns for people who need them to apply for disaster-related benefits or to file amended returns claiming disaster-related losses. If filing Forms 4506-T or 4506, the taxpayer should state on the form the request is disaster related and list the state and type of event. This helps speed up the process.
Individuals who relocate need to submit a change of address.
After a disaster, individuals may need to temporarily relocate. Those who do so should notify the IRS of their new address by submitting Form 8822, Change of Address.
The IRS encourages affected taxpayers to review all federal disaster relief
All taxpayers have the right to privacy – it’s the law.
One of the IRS’s top priorities is protecting the privacy rights of America’s taxpayers. The
agency takes this so seriously that the right to privacy is one of ten rights the Taxpayer Bill of
Rights gives all taxpayers.
Taxpayers have the right to expect that any IRS inquiry, audit or enforcement action will comply with the law and be no more intrusive than necessary. Taxpayers can also expect that the IRS will respect all due process rights, including search and seizure protections and provide a collection due process hearing when appropriate.
Here are a few more details about what a taxpayer’s right to privacy means:
The IRS cannot seize certain personal items, such as schoolbooks, clothing and undelivered mail.
The IRS cannot seize a personal residence without first getting court approval, and the agency must show there is no reasonable alternative for collecting the tax debt.
Sometimes, taxpayers submit offers to settle their tax debt that relate only to how much they owe. This is formally known as a Doubt as to Liability Offer in Compromise.
Taxpayers who make this offer do not need to submit any financial documentation.
During an audit, if the IRS finds no reasonable indication that a taxpayer has no unreported income, the agency will not seek intrusive and extraneous information about the taxpayer’s lifestyle.
A taxpayer can expect that the IRS’s collection actions are no more intrusive than necessary. During a collection due process hearing, the Office of Appeals must balance that expectation with the IRS’s proposed collection action and the overall need for efficient tax collection.
A taxpayer can expect that the IRS’s collection actions are no more intrusive than necessary. During a collection due process hearing, the Office of Appeals must balance that expectation with the IRS’s proposed collection action and the overall need for efficient tax collection.