Archive for the ‘Katrina’ Category

CONGRESS PASSES FIRST ROUND OF HURRICANE TAX RELIEF

Thursday, September 22nd, 2005 by Joe Kristan

Congress yesterday sent to the President H.R. 3768, the first tax relief legislation resulting from Hurricane Katrina.
Provisions include:
– Debt forgiveness income resulting from the hurricane – for example, a cancelled morgage, will not be taxed if cancelled before 2007.
– The 10% of AGI and $100 floor on deductions for casualty losses will be waived for Katrina losses.
– The 10% tax on early IRA and pension distributions will be waived for distributions up to $100,000 for families in the disaster area; tax can be distributed over three years, or waived if the amount is repaid to the account within three years.
– The IRS deadline extension to January 3, 2006 for post 8/29/05 filing deadlines is extended to February 28, 2006. The extension also applies to excise and employement taxes, as well as income and estate and gift taxes.
– Employment-related tax credits will be available through 2005 for employees hired in the disaster area through year-end.
The House Ways and Means Committee has a more complete summary that includes several additional provisions. For a thorough discussion of the provisions, go visit Professor Maule.
Congress is trying to help, but there are a lot of people already down in the disaster area doing great things. Give generously to The Salvation Army, the American Red Cross, or one of the other fine agencies that have been helping out since the winds stopped blowing.
LINK:TAX UPDATE IRS KATRINA RELIEF SUMMARY PAGE

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IRS WEB SITE CONSOLIDATES KATRINA GUIDANCE

Wednesday, September 21st, 2005 by Joe Kristan

The IRS has linked all of its releases and announcements related to the hurricane at thier new Katrina News Releases & Legal Guidance page.
LINK: TAX UPDATE IRS KATRINA RELIEF SUMMARY PAGE

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IRS ALLOWS KATRINA WITHDRAWALS FROM RETIREMENT PLANS

Friday, September 16th, 2005 by Joe Kristan

The IRS has granted qualified plans blanket permission to make hardship distributions or loans to disaster-area residents (Announcement 2005-70). The relief also applies for those with relatives affected by the disaster, per the announcement:

A qualified employer plan will not be treated as failing to satisfy any requirement under the Code or regulations merely because the plan makes a loan, or a hardship distribution for a need arising from Hurricane Katrina, to an employee or former employee whose principal residence on August 29, 2005, was located in one of the counties or parishes in Louisiana, Mississippi or Alabama that have been or are later designated as disaster areas eligible for Individual Assistance by the Federal Emergency Management Agency because of the devastation caused by Hurricane Katrina or whose place of employment was located in one of these counties or parishes on such date or whose lineal ascendant or descendant, dependent or spouse had a principal residence or place of employment in one of these counties or parishes on such date. Plan administrators may rely upon representations from the employee or former employee as to the need for and amount of a hardship distribution, unless the plan administrator has actual knowledge to the contrary, and such distribution is treated as a hardship distribution for all purposes under the Code and regulations.


The Tax Prof has posted a comprensive set of Katrina relief links.
Don’t forget the Katrina Benefit tonight at Biaggi’s in West Des Moines.
LINK: Tax Update Summary of Katrina relief.

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KATRINA RELIEF PASSES SENATE

Friday, September 16th, 2005 by Joe Kristan

The Senate yesterday passed its version of short-term tax relief to deal with the Katrina disaster. Tax Analysts summarizes the provisions of the Senate version of H.R. 3768:

* hold families harmless against the loss of tax benefits due to temporary relocations and allow individuals to use their 2004 income to determine the child credit and the earned income tax credit on their 2005 returns;
* provide to taxpayers who house displaced individuals an additional personal exemption of $500 per displaced person;
* extend the work opportunity tax credit to employers that hire displaced storm victims;
* provide to employers located in the disaster zone a 40 percent tax credit for wages (up to $6,000) paid to employees through the remainder of 2005;
* waive the 10 percent tax on early distributions from IRAs and pensions for individuals affected by the hurricane;
* exempt from income tax storm victims’ debts discharged by commercial lenders;
* allow full deductibility of personal casualty losses for hurricane victims;
* extend the replacement period for homes and businesses damaged by the hurricane;
* relax some restrictions on mortgage revenue bonds;
* raise the permitted charitable contribution level for corporations and individuals;
* increase the charitable mileage reimbursement rate;
* enhance the deduction for charitable donations of food and books; and
* extend tax filing deadlines and waive penalties and interest that would have applied on income, estate and gift, employment, and excise taxes for at least six months.


This is similar to the House-passed version of the bill, so the final bill will look much like this.
WHAT ABOUT ROUND TWO?
This is only the first round of Katrina tax provisions. Another bill will put in longer-term reconstruction incentives, perhaps including a $200,000 Section 179 deduction and restored bonus depreciation for the disaster area proposed last night by the President.
LINKS:
Tax Analysts free coverage
Joint Committee on Taxation explanation of House-passed bill

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KATRINA BASH TOMORROW IN WEST DES MOINES

Thursday, September 15th, 2005 by Joe Kristan

You can have a good time and do a good deed tomorrow at the “After the Storm” benefit at Biaggi’s. Details are below. Contact Rebecca Kavanagh for more information.
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POWER TOOLS!
If you can’t make the party, just click the links and give to the American Red Cross, The Salvation Army, or another fine relief charity.

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KATRINA AID WORKERS GET EXTENSIONS

Thursday, September 15th, 2005 by Joe Kristan

The IRS will give Katrina aid workers the same automatic extension of return payment and filing deadlines already available for residents of the disaster area. This means aid workers – relief workers assisting in the disaster area – have until January 3 to pay amounts otherwise due since August 29. This includes third quarter payments due today and extended 1040s due October 15. (IR 2005-103)
LINK: Summary of Katrina relief.

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WILL KATRINA BLOW AWAY YOUR TAX TROUBLES?

Monday, September 12th, 2005 by Joe Kristan

If you were hoping that the IRS would forget about your taxes because of the hurricane, don’t count on it.
The IRS has given taxpayers from the Katrina disaster area extensions for filing returns and making tax payments. Now they have also given themselves until January 3, 2006 to do things they would otherwise have to do before then (Notice 2005-66). For example, deadlines for deficiency notices, assessments and lawsuits are extended for that period.
LINK: Summary of IRS Hurricane Relief.

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KATRINA TAX UPDATE: SEPTEMBER 9, 2005

Friday, September 9th, 2005 by Joe Kristan

The IRS has now given taxpayers in the Katrina disaster area until January 3, 2006 to pay taxes and file returns due starting August 29 through January 2. Among other items, this covers third quarter individual and corporate estimates; corporate extended returns due September 15; individual extended returns due October 15; and corporate estimated tax payments due December 15. (IR 2005-96)
LEAVE-SHARING.The IRS has also announced that “leave-donation” programs will be tax-preferred. This covers arrangements where employees give up accrued vacation in exchange for the employer making a cash payment of accrued vacation pay to charity (IR 2005-97; Notice 2005-68). The payments will be deductible to the employer without being subject to employment taxes; the employee will not pick up the payments in income. This only covers payments for Katrina relief, and only if the payments are remitted to charity before January 1, 2007
Taxation of disaster relief payments is covered in this comprehensive summary of Katrina and taxes provided by CCH (via TaxGuru.net).
THEY STILL NEED HELP. Consider gifts to the Salvation Army, the Red Cross, or other worthy charities.
LINK: Summary of IRS Hurricane Relief

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KATRINA TAX UPDATE: SEPTEMBER 8, 2005

Thursday, September 8th, 2005 by Joe Kristan

sasheild.gifCongress is beginning to consider the shape of tax incentives it may enact in response to the Katrina disaster. Ideas floated by Congressional Democrats so far include:

* provide half a dependency deduction (for each Hurricane Katrina survivor) to taxpayers that house for at least 90 days those displaced by the storm;
* exempt from taxable income education expenses for students displaced by Hurricane Katrina;
* extend the work opportunity tax credit to employers that hire workers displaced by the hurricane; and
* provide a 50 percent tax credit, up to $12,000, to employers with fewer than 50 employees that continue paying employees during the hurricane rebuilding phase.

Republicans seem to lean more towards the something like accelerated depreciation and expensing provisions for rebuilding that were enacted for areas affected by the September 2001 terror attacks.
Meanwhile, your help is still needed. Give generously to the Salvation Army, the Red Cross, or one of the worthy charities here.
DES MOINES READERS! A friend forwards the following request:

We have friends who are displaced from New Orleans. They moved from West Des Moines to New Orleans in August for Carlo’s job with an insurance company. Jan and the boys (Paul and Kevin) are now back in West Des Moines and Carlos is staying in Baton Rouge to work with other displaced co-workers. The boys have started back at their old schools (Indian Hills and Westridge in West Des Moines). They are living with us while they look for housing. They are looking for a 3 bedroom condo, house or town home they can rent, preferably in WDM. They do have a well-behaved indoor dog. If anyone has any suggestions or ideas, please let me know. They are glad to be safe, but exhausted from the stress. They have very few belongings with them.

If you know of a place for these folks, send me an email, and I will pass it on.
LINK: Summary of IRS Hurricane Relief

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PORK DREAMS

Thursday, September 8th, 2005 by Joe Kristan

For those who say the federal government is starved for resources to deal with the aftermath of Katrina, consider this:

One way to show such sacrifice and resolve would be to agree to shift at least half of the $25 billion dollars that the recently enacted highway bill (SAFETEA-LU) dedicates to frivolous pork barrel spending in local communities around the nation. As Mississippi and Louisiana confront the replacement of dozens of wrecked bridges, is it possible that Rep. Don Young (R-AK) could give up one of the two $200 million dollar bridges he secured for his state? Perhaps Alaskans could go without the one that will serve a town of just fifty people, who now ride a ferry?


And that’s just one highway bill. (Via Instapundit)

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