Where to turn when disaster strikes

Hurricane Sandy hit the United States with a vengeance. Like millions across the country, I sympathize with those who lost their lives, their homes, and those things most important to them.

After seeing and hearing of the huge losses they suffered, we’re reminded to look again at the state and federal resources that are in place to help us when disaster strikes.

If you own a small business, I would direct you to www.sba.gov/disaster. This website provides you with information on where to go for disaster loans, which areas qualify, how such loans can be used, and other resources to directly help those most affected by the disaster. For example, those in Wisconsin who were affected by this past summer’s drought can look at the specific counties listed as disaster areas to determine whether assistance is available.

Speaking of the drought, Gov. Walker last July announced loan guarantees to farmers who were affected. Designed to help our small business farmers, this Drought Relief Guarantee Program, which is administered by WHEDA, is a financing product that will provide a 90% guarantee on agricultural loans up to $15,000 for three years. Additional information can be found at www.wheda.com.

In general, if you’ve been affected by any disaster, visit www.irs.gov to see what assistance is available from the government.

For those affected by Hurricane Sandy, the Internal Revenue Service alerted employers and other taxpayers that because the hurricane has been designated as a qualified disaster for federal tax purposes, qualified disaster relief payments made to individuals by their employer or any person can be excluded from those individuals’ taxable income.

 

Qualified disaster relief payments include amounts to cover necessary personal, family, living, or funeral expenses that were not covered by insurance. They also include expenses to repair or rehabilitate personal residences or repair or replace the contents to the extent that they were not covered by insurance. Again, these payments would not be included in the individual recipient’s gross income. In addition, because of its designation as a qualified disaster, employer-sponsored private foundations may provide disaster relief to employee-victims in areas affected by the hurricane without affecting their tax-exempt status. 

The IRS also announced it will postpone various tax-filing and payment deadlines that occurred in late October to specific taxpayers affected by the disaster. These individuals might have an extended time in which to file the returns and pay the taxes due. The IRS is coordinating the relief provided by law to taxpayers in the FEMA-designated counties and indicates it will work with any taxpayer who resides outside the disaster area but whose records or tax professionals are located in the areas affected by the superstorm.

Historically, we have also seen some changes made to the tax code that allow for extra relief to those taxpayers affected most. This has come in the form of additional credits, additional time for filing, different guidelines to allowable expenses for certain credits, and a broadened casualty loss provision. Although not immediate, you should watch the news for tax bills that may be focused on helping those affected by natural disasters.

Bottom line: Always stay connected to those who are able to provide you with assistance. This occurs at the state level as well as the federal level. If disaster strikes, ask your tax professional to point you in the right direction for finding help, and be sure to avail yourself of all the options that are out there.

Sign up for the free IB Update – your weekly resource for local business news, analysis, voices, and the names you need to know. Click hereIf you are not already a subscriber to In Business magazine, be sure to sign up for our monthly print edition here.