NAS-02-19T,  Apr. 18, 2002
 
NASHVILLE -- The Internal Revenue Service announced special tax relief for residents of eight Tennessee counties affected by the storms and flooding that occurred January 23 to 28, 2002 and March 15 to 20, 2002. The declaration, signed by President Bush on April 5, includes Bledsoe, Blount, Claiborne, Cocke, Hancock, Hawkins, Loudon and Sevier counties as Federal Disaster Areas.

Tax relief includes offering residents of the federally declared disaster areas the option of claiming uninsured disaster-related casualty losses on either their 2001 or 2002 federal income tax returns. Filing amended returns and claiming the losses on 2001 tax returns usually results in tax refunds, giving residents needed money for repairs now. Taxpayers must wait until 2003 to file tax returns for the 2002 tax year.

Taxpayers located in designated areas affected by the January incident will be handled on a case-by-case basis and can be serviced by either visiting their local IRS office or by calling toll-free 1-800-TAX-1040 (1-800-829-1040) for tax assistance.

Taxpayers who were located in the designated areas and who were adversely affected by the March incident may need extra time to file returns or pay taxes, so they are granted an automatic 30-day extension from the date of the disaster event. That means generally that any federal tax return or federal tax that was due on or after March 20, 2002 and before April 22, 2002 may be filed or paid by April 22, 2002 without penalty. Also, any interest assessed on that income tax will be abated for the extension period. This automatic extension does not apply to Form 5500 Series Returns and to employment or excise tax deposits; however, penalties on these deposits may be abated during this period due to reasonable cause.

When returns are filed they should be labeled across the top margin in red “TENNESSEE STORM AND FLOOD DISASTER.” If returns are electronically filed, this statement should be marked at the top of the Form 8453 and 1040V.

Affected Taxpayers who need copies of previously filed tax returns can have their requests expedited and will not be charged the usual photocopying fees. Again, taxpayers should label the top margin of Form 4506, Request for Copy or Transcript of Tax Form, as indicated above.

For information on claiming a casualty loss deduction, see IRS Publication 547, Casualties, Disaster, and Thefts. 

Taxpayers are reminded that federal disaster payments are not considered taxable income for federal tax purposes.

Taxpayers who have questions or need help from the IRS should call 1-800-829-1040. The toll-free number for the Federal Emergency Management Agency is 1-800-463-9029.