IR-2023-184: IRS: Taxpayers impacted by seawater intrusion in parts of Louisiana qualify for tax relief; various deadlines postponed to Feb. 15

Issue Number: IR-2023-184

Inside This Issue

IRS: Taxpayers impacted by seawater intrusion in parts of Louisiana qualify for tax relief; various deadlines postponed to Feb. 15

WASHINGTON — The Internal Revenue Service today announced tax relief for individuals and businesses affected by seawater intrusion in parts of Louisiana. These taxpayers now have until Feb. 15, 2024, to file various federal individual and business tax returns and make tax payments.

Following the disaster declaration issued by the Federal Emergency Management Agency (FEMA), individuals and households affected by the seawater intrusion that reside or have a business in Jefferson, Orleans, Plaquemines and St. Bernard parishes qualify for tax relief. The current list of eligible localities is always available and updated on the disaster relief page on IRS.gov.

Filing and Payment Relief

The tax relief postpones various tax filing and payment deadlines that occurred from Sept. 20, 2023, through Feb. 15, 2024 (postponement period). As a result, affected individuals and businesses will have until Feb. 15, 2024, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Feb. 15, 2024, deadline will now apply to:

Individuals who had a valid extension to file their 2022 return due to run out on Oct. 16, 2023. The IRS noted, however, that because tax payments related to these 2022 returns were due on April 18, 2023, those payments are not eligible for this relief. So, this is more time to file, not to pay.
Quarterly estimated income tax payments normally due on Jan. 16, 2024.
Quarterly payroll and excise tax returns normally due on Oct. 31, 2023, and Jan. 31, 2024.
Calendar-year corporations whose 2022 extensions run out on Oct. 16, 2023.
Calendar-year, tax-exempt organizations whose extensions run out on Nov. 15, 2023.

In addition, penalties for the failure to make payroll and excise tax deposits due on or after Sept. 20, 2023, and before Oct. 5, 2023, will be abated as long as the deposits are made by Oct. 5, 2023.

The IRS disaster relief page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these kinds of unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Additional Tax Relief

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2023 return normally filed next year), or the return for the prior year (2022). Taxpayers have extra time – up to six months after the due date of the taxpayer’s federal income tax return for the disaster year (without regard to any extension of time to file) – to make the election. Be sure to write the FEMA declaration number – 3600-EM − on any return claiming a loss. See Publication 547, Casualties, Disasters, and Thefts, for details.

Qualified disaster relief payments are generally excluded from gross income. In general, this means that affected taxpayers can exclude from their gross income amounts received from a government agency for reasonable and necessary personal, family, living or funeral expenses, as well as for the repair or rehabilitation of their home, or for the repair or replacement of its contents. See Publication 525, Taxable and Nontaxable Income, for details.

Additional relief may be available to affected taxpayers who participate in a retirement plan or individual retirement arrangement (IRA). For example, a taxpayer may be eligible to take a special disaster distribution that would not be subject to the additional 10% early distribution tax and allows the taxpayer to spread the income over three years. Taxpayers may also be eligible to make a hardship withdrawal. Each plan or IRA has specific rules and guidance for their participants to follow.

2022.06 Deadline for FATCA RO certifications

For the certification period ending December 31, 2021, deadline for FATCA Responsible Officer (“RO”) certifications is July 1, 2022 (see FATCA News & Information no. 2022-03).

2021.11 IRS Updates Public Key for FATCA Filing

The IRS informs that the Public Key used for FATCA reporting will expire soon. A new Public Key will be issued on December 3, 2021 and can be downloaded from the IDES portal, to be used for new xml file reporting.

Financial Institutions that need to purchase or renew their digital certificate can consult the FATCA IDES Resources and Support Information page, where the Certification Authorities recognized and accepted by the IRS are listed.

2021.07 What’s new on the FIRE platform

IRS introduces important changes to the FIRE (Filing Information Returns Electronically) platform where, remember, QIs upload their 1042-S and 1099 electronic modules.

The most important change concerns the request of TCC (Transmitter Control Code) by new entities. It will only be possible through the online Information Returns (IR application). The paper form 4419 and the electronic version on FIRE System will no longer be used. New users will need to authenticate their identity through an IRS Secure Access Account in order to access the IR (details here ) .

Starting in 2022, likely in the fall, the change will also be imposed on existing FIRE users prior to the change above.

2021.03 What’s new on 1042

The content of the Form 1042 for fiscal year 2020 remains unchanged, with only two explanatory notes added with respect to the previous year:

On page 1, a “Note” has been inserted under the “Record of Federal Tax Liability” (lines 1 to 60). It clarifies that the totals of the “Record of Federal Tax Liability” table are inserted in rows 64b to 64d, as indicated in the instructions.
On page 2, a header (“Computation of Tax Due or Overpayment”) has been inserted above lines 64a to 71, to indicate that those lines pertain to the computation of the tax due to the IRS or overpayment.

2021.02 What’s new on 1042-S forms

There are no major changes for QI when filling in the 1042-s forms for 2020.

1042-s printable form

Three new features have been introduced in the paper format. The first is the possibility, for a partnership or a trust, to withhold and report in a subsequent year, designating a specific deposit of the withholding as attributable to the preceding year.

The second new feature concerns the updating of the Chapter 3 Status Code. Codes 01 (US Withholding Agent – FI), 02 (US Withholding Agent – Other) and 34 (US Withholding Agent – Foreign branch of FI) are no longer valid. Instead, codes 36 (Foreign Government – Integral Part) and 37 (Foreign Government – Controlled Entity) have been added. Finally, for code 19, the description has been updated from “Government or International Organization” to “International Organization.”

The third new feature is the possibility of inserting the “US” code in box 12f (Country Code) if the withholding agent is a U.S. person or a foreign branch of a U.S. person.

1042-S electronic file for FIRE platform

The three changes above are also incorporated into the electronic format of the form.

If the withholding agent is a partnership or a trust that is permitted to withhold in a subsequent year, it must enter the code “1” in the “W records”, at position 883.

Instead, the new Chapter 3 Status Code can be inserted in the “W records”, at position 533-534 (Withholding Agent’s Chapter 3 Status Code) and in the “Q records” at positions:

786-787 (Recipient’s Chapter 3 Status Code)
850-851 (Intermediary’s or FTE’s Chapter 3 Status Code)
984-985 (Payer’s Chapter 3 Status Code)

Finally, the US code can be inserted in the “W records”, at position 258-259.

You can download the latest IRS publications “Instructions for Form 1042-S” and “Publication 1187” from this page.

2021.01 Fire Portal

FIRE Test Portal
IRS informs that the FIRE TEST portal (https://fire.test.irs.gov), for the submission of test forms 1042-S and 1099, will be available from January 5, 2021.

FIRE Production Portal
IRS informs that the FIRE production portal (https://fire.irs.gov), for the submission of forms 1042-S and 1099, as well as their extensions, will be available from January 8, 2021.

News on FATCA deadline

On 25th March 2020, Internal Revenue Service announced that the deadline for submitting FATCA reports (Form 8966) for Reporting Model 2 FFI and Participating FFI was postponed. The IRS communication has been included in the Reporting section on the page FATCA – FAQs General.

The new deadline for submitting FATCA Form 8966 for the fiscal year 2019 is extended from 31st March 2020 to 15th July 2020. The extension is automatic and does not require FFIs to submit Form 8809-I.

2020.02 What’s new on 1042

Instructions for 2019 tax year, introduced on form 1042 the following changes:

All amounts on 1042 need to be rounded to whole dollars.
Reliance on proposed regulations reducing burden under FATCA and Chapter 3, concerning 1) Withholding and reporting in a subsequent year and (2) Adjustments to overwithholding under the reimbursement and set-off procedures.
Schedule Q (Form 1042), Tax Liability of Qualified Derivatives Dealer (QDD), need to be attached to 1042 for each QDD.

2020.01 – What’s new on 1042-S forms

What’s new for Tax Year 2019
There are no major changes for QI when filling in the 1042-S forms for 2019.

1042-S paper/pdf form
Two new features have been introduced in the paper format. The first is the introduction of the income code 55 for “Taxable death benefits on life insurance contracts.” The second introduces a new box in the 1042-S module. The box is the 7c and has been added to indicate the corporate interest occurred to a partnership in the following year.

1042-S electronic/txt file
The two changes above are also incorporated into the electronic format of the form. The new income code can be used in the position 4-5 of the “Q records”, while in the field 999, always of the “Q records”, it will be indicated “1” if the check of the field 7c has been crossed in 1042-S paper.

You can download the latest IRS publications “Instructions for Form 1042-S” and “Publication 1187” from this page.