IND-2002-55,  June 14, 2002  

LOUISVILLE - The IRS has granted special disaster-related tax law provisions and administrative relief to taxpayers in 32 Kentucky counties recently declared eligible for federal disaster assistance following severe storms, tornadoes, and flooding occurring on April 27, 2002, and continuing.

“A presidential disaster assistance declaration triggers certain tax law relief provisions. For qualifying residents and businesses, this may mean an almost immediate federal income tax refund,” said IRS spokesman Dan Boone. 

Subject to some limits, taxpayers can generally deduct unreimbursed, storm-related losses as casualty losses on their federal income tax returns for the year of the loss. In other words, taxpayers would be able to claim any deductible losses occurring this year on their 2002 federal income tax returns, which they would normally file next year by April 15, 2003. However, in the case of a storm-related loss occurring in these 32 declared counties, a taxpayer can instead choose to deduct the loss on his or her 2001 federal income tax return by filing an amended tax return. This often results in a quick federal tax refund – financial help when needed most.

These special tax law provisions apply to taxpayers in the Kentucky counties of Boyle, Breckinridge, Casey, Clay, Crittenden, Floyd, Grayson, Hancock, Hardin, Henderson, Hopkins, Jackson, Knott, Knox, Larue, Laurel, Letcher, Marion, Martin, McCreary, McLean, Meade, Nelson, Ohio, Pike, Pulaski, Rockcastle, Taylor, Union, Washington, Webster and Whitley.

Affected taxpayers in these 32 counties who need copies of previously filed tax returns will have their requests expedited by the IRS and will not be charged the usual photocopying fees. Taxpayers should mark the top margin of Form 4506, Request for Copy or Transcript of Tax Form, in large, red letters with the words “Kentucky Storm, Tornadoes, and Flood Disaster.”

More information about claiming storm-related casualty losses can be found in IRS Publication 547, Casualties, Disasters, and Thefts.

Additionally, taxpayers may speak to an IRS representative by calling toll-free at 1-800-829-1040 between the hours of 7 a.m. and 10 p.m., Monday through Friday. Taxpayers needing face-to-face help with disaster loss tax claims may also visit the closest IRS Taxpayer Assistance Center. Check our Web site listing of IRS offices in Kentucky for days and hours of operation.

The IRS also reminds taxpayers that disaster benefits paid by the federal government are not taxable income and do not have to be reported on federal tax returns.