Tax-Exempt Organizations Affected by Hurricanes Harvey and Irma Granted Tax Relief

Tax-exempt organizations in parts of Texas, Florida, Puerto Rico and the Virgin Islands may qualify for tax relief from the IRS.  Organizations may get some extra time to file returns if they:

  • are in the Hurricane Harvey and Hurricane Irma disaster areas, and
  • have a filing due date after the hurricane hit and before Jan. 31, 2018.

These organizations now have until Jan. 31, 2018 to file. The relief applies to original and extended due dates in this period. The start date of the relief varies by area.

  • Texas: Aug. 23, 2017
  • Florida: Sept. 4, 2017
  • Puerto Rico and the Virgin Islands: Sept. 5, 2017

About annual information returns for tax-exempt organizations:

  • Most organizations are required to file an information return each year. These may include Forms 990, 990-PF, 990-EZ, 990-T or 990-N.
  • The normal due date for 990 returns is the 15th day of the fifth month after the close of the organization’s accounting period. For example, if it runs on a calendar-year, the due date is May 15.
  • Organizations can use Form 8868 to request six more months to file. An organization that runs on a calendar-year basis would then have until Nov. 15 to file.

To reconstruct lost records, organizations can follow these tips:

  • Returns: Request copies from the IRS using Form 4506-A.
  • Payroll records: If an organization uses a payroll service, it can request records. If they do not, federal and state agencies may be able to supply records. Checks from the bank or employees’ pay stubs can help as well.
  • Donation records: Use bank records or other electronic files.

See the record reconstruction page on IRS.gov for more tips on replacing lost records.

For more information, including a current list of counties and other localities that are eligible for this relief, visit the Help for Hurricane Harvey VictimsHelp for Hurricane Irma Victims,  Tax Relief in Disaster Situations and Around the Nationpages on IRS.gov.

The IRS is watching matters closely to resolve tax administration issues that arise. For the latest news, check the Disaster Situations pages on IRS.gov. The IRS updates disaster relief information frequently.

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Like Harvey, Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane Irma

WASHINGTON —The Internal Revenue Service today announced that 401(k)s and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Irma and members of their families. This is similar to relief provided last month to victims of Hurricane Harvey.

Participants in 401(k) plans, employees of public schools and tax-exempt organizations with 403(b) tax-sheltered annuities, as well as state and local government employees with 457(b) deferred-compensation plans may be eligible to take advantage of these streamlined loan procedures and liberalized hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures.

Retirement plans can provide this relief to employees and certain members of their families who live or work in disaster areas affected by Hurricane Irma and designated for individual assistance by the Federal Emergency Management Agency (FEMA). For a complete list of eligible localities, visit https://www.fema.gov/disasters. To qualify for this relief, hardship withdrawals must be made by Jan. 31, 2018.

The IRS is also relaxing procedural and administrative rules that normally apply to retirement plan loans and hardship distributions. As a result, eligible retirement plan participants will be able to access their money more quickly with a minimum of red tape. In addition, the six-month ban on 401(k) and 403(b) contributions that normally affects employees who take hardship distributions will not apply.

This broad-based relief means that a retirement plan can allow a victim of Hurricane Irma to take a hardship distribution or borrow up to the specified statutory limits from the victim’s retirement plan. It also means that a person who lives outside the disaster area can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area.

Plans will be allowed to make loans or hardship distributions before the plan is formally amended to provide for such features. In addition, the plan can ignore the reasons that normally apply to hardship distributions, thus allowing them, for example, to be used for food and shelter. If a plan requires certain documentation before a distribution is made, the plan can relax this requirement as described in Announcement 2017-13.

The IRS emphasized that the tax treatment of loans and distributions remains unchanged. Ordinarily, retirement plan loan proceeds are tax-free if they are repaid over a period of five years or less.  Under current law, hardship distributions are generally taxable and subject to a 10-percent early-withdrawal tax.

USPTO launches website for customers affected by the Hurricanes

The USPTO has a new webpage for customers affected by the Hurricanes. It includes contact information for those who may have questions or problems regarding applications or other proceedings related to patents, trademarks, or other business before the agency. The webpage will be updated to include links to forthcoming guidance and instructions for customers impacted by Harvey, and for those impacted by Hurricane Irma should it become necessary.

Beware of Fake Charity Scams Relating to Hurricanes Harvey and Irma

The Internal Revenue Service today issued a warning about possible fake charity scams emerging due to Hurricanes Harvey and Irma and encouraged taxpayers to seek out recognized charitable groups for their donations.

While there has been an enormous wave of support across the country for the victims of Hurricanes Harvey and Irma, people should be aware of criminals who look to take advantage of this generosity by impersonating charities to get money or private information from well-meaning taxpayers. Such fraudulent schemes may involve contact by telephone, social media, e-mail or in-person solicitations.

Criminals often send emails that steer recipients to bogus websites that appear to be affiliated with legitimate charitable causes. These sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities in order to persuade people to send money or provide personal financial information that can be used to steal identities or financial resources.

IRS.gov has the tools people need to quickly and easily check the status of charitable organizations.

The IRS cautions people wishing to make disaster-related charitable donations to avoid scam artists by following these tips:

  • Be sure to donate to recognized charities.
  • Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature, Exempt Organizations Select Check, through which people may find qualified charities; donations to these charities may be tax-deductible.
  • Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution. Scam artists may use this information to steal a donor’s identity and money.
  • Never give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the donation.
  • Consult IRS Publication 526, Charitable Contributions, available on IRS.gov. This free booklet describes the tax rules that apply to making legitimate tax-deductible donations. Among other things, it also provides complete details on what records to keep.

Taxpayers suspecting fraud by email should visit IRS.gov and search for the keywords “Report Phishing.”

More information about tax scams and schemes may be found at IRS.gov using the keywords “scams and schemes.” Details on available relief can be found on the disaster relief page on IRS.gov.

Learn about Tax Benefits for Education

The beginning of the school year is a good time for a reminder of the tax benefits for education. These benefits can help offset qualifying education costs.

Here is information about two tax credits available to those who pay higher education costs for themselves, a spouse or a dependent.

The American Opportunity Tax Credit (AOTC) is:

  • Worth a maximum benefit up to $2,500 per eligible student.
  • Only available for the first four years at an eligible educational or vocational school.
  • For students pursuing a degree or other recognized education credential.
  • Partially refundable. Eligible taxpayers can get up to $1,000 of the credit as a refund, even if they do not owe any tax.

The Lifetime Learning Credit (LLC) is:

  • Worth up to $2,000 per tax return, per year, no matter how many students qualify.
  • Available for all years of postsecondary education and for courses to acquire or improve job skills.
  • Available for an unlimited number of tax years

Taxpayers should use Form 8863, Education Credits, to claim these education credits.

Additionally:

  • A student is required to have Form 1098-T, Tuition Statement, to be eligible for an education benefit. They receive this form from the school attended.
  • Taxpayers may use only qualified expenses paid to figure a tax credit. These include tuition and fees and other related expenses for an eligible student.
  • Eligible educational schools are those that offer education beyond high school. This includes most colleges and universities.
  • Taxpayers may only claim qualified expenses in the year paid.
  • Taxpayers can’t claim either credit if someone else claims them as a dependent.
  • Income limits could reduce the amount of credits.
  • Taxpayers can’t claim either the AOTC or LLC for the same student or for the same expense in the same year.
  • The Interactive Tax Assistant tool on IRS.gov can help determine eligibility for certain educational credits including the American Opportunity Credit and the Lifetime Learning Credit.