SCACPA Urges IRS to Consider Paths for Tax Deadline Extensions for Those Under Mandatory Evacuation Orders

SCACPA Urges IRS to Consider Paths for Tax Deadline Extensions for Those Under Mandatory Evacuation Orders

South Carolina’s road to recovery from Hurricane and Tropical Storm Florence will be long, but SCACPA has been hard at work to secure assistance and relief for the state’s taxpayers and preparers.

On Monday, Sept. 17, the South Carolina Association of CPAs made a formal request to the IRS for an efficient and expedient path to grant tax deadline extensions for those who obeyed the governor’s mandatory evacuation orders as Hurricane Florence approached our coast.

In the aftermath of Florence’s destruction, certain areas of South Carolina have been deemed by President Donald Trump to qualify for Federally Declared Disaster relief. So far, South Carolina has qualified for Public Assistance, and it will take a declaration that South Carolina be eligible for Individual Assistance for tax deadlines to be extended.

SCACPA representatives have been in direct contact with the IRS at the Senior Stakeholder Liaison level to convey our recommendations on what we’ve identified as a recurring issue for disaster recovery. SCACPA is the only organization advocating on behalf of South Carolina CPAs, and we will continue to promote common sense solutions that remove obstacles.

Under IRS guidelines, those who have missed their deadlines but are not in a Presidential Federally Declared Disaster area can request “reasonable cause relief” after a penalty is asserted. The IRS reviews these requests on a case-by-case basis. This begins when the taxpayer or authorized representative explains their conditions to an IRS assistor, either by phone or in writing. The IRS historically has not provided automatic systemic relief in these instances, as it does under IRC § 7508A (“Authority to postpone certain deadlines by reason of Presidentially declared disaster or terroristic or military actions”).

It was on Tuesday, Sept. 11, 2018, when Gov. Henry McMaster instituted mandatory evacuations for the entire South Carolina coastline. As the week went on and Florence’s track changed, evacuation orders were lifted for certain areas. In turn, those areas will not be included in any forthcoming Disaster Declaration, and tax preparers in that area will not be eligible for deadline extension provided under IRC § 7508A, even though their mandatory evacuations severely impeded business communications for many days for citizens across the state.

In any emergency, the expectation is that individuals will put personal safety and the safety of others above any other task or responsibility. Thus, SCACPA has respectfully requested 90-day tax relief under “reasonable cause” provisions in the form of waiving penalties, accepting late elections, and accepting payments without penalty for taxpayers within our jurisdiction and those outside who are relying on our members for assistance.

SCACPA’s aim is to remove burdens on the taxpayers who obeyed a mandatory evacuation request by the governor and the IRS from having to approve what will surely be numerous requests for relief.

When looking at the reasonable cause categories, and criteria for failure to file, SCACPA believe the majority of citizens were impacted in a significant way.

  • Absence, IRM 20.1.1.3.2.2.1

o   In many cases, both the taxpayer and/or the tax preparer were under a mandatory evacuation order. This absence would make the transmittal of key information needed to process and review returns impossible.

  • Mail problem IRM 20.1.1.3.2.1

o   Mail processing was impacted in areas where mandatory evacuations were enforced. Taxpayers and tax preparers were unable to file using the U.S. Postal Service because post offices were closed in those areas.

  • Records unobtainable, IRM 20.1.1.3.2.2.3

o   Stored records and/or records in transit were inaccessible due to having to hastily relocate their working environments, if one could be found.

  • Reliance, IRM 20.1.1.3.2.2.5

o   Tax preparers were relocated due to mandatory evacuations and not accessible. Preparers outside of evacuation zones also had to prepare for potential disaster and were asked to focus on the safety of themselves and others.  Therefore, they were not able to prepare and submit returns for their clients.

On behalf of SCACPA’s 4,700 members and their clients, we believe it is appropriate for the IRS to consider and grant relief during these difficult hours for South Carolina.

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[Letter from SCACPA CEO Chris Jenkins to Evelyn Dyson Lee, IRS Senior Stakeholder Liaison – Area 4, Communications and Liaison (C&L) on Monday, Sept. 18, 2018]

Dear Mrs. Lee,

Thank you in advance for taking the time to read this communication, I recognize you’ve previously responded to Mr. Newhouse. I would respectfully request that you consider this the formal request on behalf of the Association and our membership. I acknowledge you believe assistance cannot be offered. I’d request an escalation and assistance in finding a path that would be more efficient for both the taxpayer and the IRS.

In any emergency, the expectation is that individuals will put personal safety and the safety of others above any other task or responsibility. Governor McMaster was quick to act and instituted mandatory evacuations on September 11th. The impact of these evacuations effected citizens statewide, severely impeding business communications for an extended period of time.

While we fully understand the requirements of IRC 7508A, our request does not include all of the specified remedies that provision provides. Due to the mandatory evacuations, we respectfully request tax relief for “reasonable cause” in the form of waiving penalties, accepting the late elections, and accepting payments without penalty for taxpayers within our jurisdiction, and those outside who are relying on our members for assistance.

When looking at the reasonable cause categories, and criteria for failure to file, we believe the majority of citizens were impacted in a significant way.

• Absence, IRM 20.1.1.3.2.2.1
o In many cases both the taxpayer and/or the tax preparer were under a mandatory evacuation order. This absence would make the transmittal of key information needed to process and review returns impossible.
• Mail problem IRM 20.1.1.3.2.1
o Mail processing was impacted in areas where mandatory evacuations were enforced. Taxpayers and tax preparers were unable to file using the US Postal Service.
• Records unobtainable, IRM 20.1.1.3.2.2.3
o Stored records and or records in transit were temporarily inaccessible due to mandatory evacuation.
• Reliance, IRM 20.1.1.3.2.2.5
o Tax preparers were relocated due to mandatory evacuations and not accessible. Preparers outside of evacuation zones had to prepare for potential disaster and were asked to focus on the safety of themselves and others.

On behalf of our 4,700 members and their clients we appreciate your consideration of relief during this difficult time.

Yours truly,
Christopher Jenkins
CEO – South Carolina Association of CPAs

By |2018-09-18T12:11:01+00:00September 18th, 2018|Business & Industry, Featured, Governmental, Legislative/Advocacy, Tax|0 Comments

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