by Matt Gerard
on September 22, 2017
For individuals and families ravaged by the effects of Hurricanes Harvey and Irma, tax relief is probably the item of least concern during this time of rebuilding. As hurricane victims slowly regain a sense of normalcy, their thoughts will return to more routine matters. During this time, hurricane victims should be aware that they may qualify for certain tax relief concerning their employee welfare benefits.
Section 7508A of the Internal Revenue Code grants authority to the Internal Revenue Service (IRS) to postpone certain tax deadlines by reason of a Presidentially declared disaster, and the IRS announced in TX-2017-09 that victims of Hurricane Harvey in parts of Texas may qualify for particular tax relief. Additionally, the IRS announced that victims of Hurricane Irma in Florida, Georgia, Puerto Rico, and the U.S. Virgin Islands may qualify for tax relief in FL-2017-04, GA-2017-02, PR-2017-01, and VI-2017-01 respectively. The IRS created a website as a resource of tax-related news and assistance available to victims of Hurricanes Harvey and Irma. The website is https://www.irs.gov/newsroom/tax-relief-in-disaster-situations.
WHO MAY QUALIFY FOR THE TAX RELIEF?
In Florida, individuals who reside or have a business in any Florida county may qualify for tax relief.
In Georgia, individuals who reside or have a business in any Georgia county may qualify for tax relief.
In Puerto Rico, individuals who reside or have a business in the following municipalities may qualify for tax relief: Adjuntas, Aguas Buenas, Barranquitas, Bayamón, Camuy, Canóvanas, Carolina, Cataño, Ciales, Comerío, Culebra, Guaynabo, Hatillo, Jayuya, Juncos, Las Piedras, Loíza, Luquillo, Orocovis, Patillas, Quebradillas, Salinas, San Juan, Utuado, Vega Baja, Vieques, and Yauco.
In Texas, individuals who reside or have a business in the following Texas counties may qualify for tax relief: Aransas, Austin, Batrop, Bee, Brazoria, Burleson, Calhoun, Chambers, Colorado, DeWitt, Fayette, Fort Bend, Galveston, Goliad, Gonzales, Grimes, Harris, Hardin, Jackson, Jasper, Jefferson, Karnes, Kleberg, Lavaca, Lee, Liberty, Madison, Matagorda, Montgomery, Newton, Nueces, Orange, Polk, Refugio, Sabine, San Jacinto, San Patricio, Tyler, Victoria, Walker, Waller, Washington, and Wharton Counties.
In the U.S. Virgin Islands, individuals who reside or have a business in the islands of St. Croix, St. John, and St. Thomas may qualify for tax relief.
The IRS is continually updating the list of counties that qualify for tax relief. For the most current list of counties, please check the announcement linked to the area of your concern or go to https://www.irs.gov/newsroom/tax-relief-in-disaster-situations.
What Tax Relief is Available?
The IRS has postponed certain tax deadlines falling on or after August 23, 2017, and before January 31, 2018. The exact deadline time frame varies with each announcement, so victims in different regions will have different starting dates. Please check your respective announcement for your applicable deadlines. Regardless, the IRS has given affected taxpayers until January 31, 2018, to perform time-sensitive actions described in Treas. Reg. § 301.7508A(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007). The available tax relief that is most applicable to employee welfare benefit plans is as follows:
Please be aware that the above-listed items are a small portion of the deadlines listed in Rev. Proc. 2007-56. Please speak with your trusted legal or tax advisors on what additional relief may be available to you under IR-2017-135.
How is claim substantiation affected?
Currently, the IRS has not relaxed third-party claim substantiation requirements. Consequently, hurricane victims must still provide independent, third-party substantiation evidence to their cafeteria plan administrator in order to be reimbursed for expenses for qualified benefits. However, some organizations, such as the Employers Council on Flexible Compensation (ECFC), have urged the U.S. Department of the Treasury and Internal Revenue Service (IRS) to provide limited relief from the substantiation requirements for cafeteria plans. To date, neither the U.S. Department of the Treasury nor IRS has responded to such requests. If the IRS declares such substantiation relief, NBS will inform its clients of any applicable relief.
Are Midyear election changes available?
Please understand that a natural disaster by itself is not a permitted election change event. Nevertheless, certain events related to Hurricane Harvey and Hurricane Irma may allow participants to make an election change. For example, a participant may be on an unpaid leave of absence, a participant’s spouse may have lost employment, or a participant’s daycare provider may have changed. If you have questions on midyear election changes, please contact your NBS account representative.
In conclusion, NBS sympathizes with all employers and employees who suffered under Hurricane Harvey and Hurricane Irma. During this time of refocusing and rebuilding, NBS will strive to eliminate any confusion surrounding your employee welfare benefit plan and to provide caring service to your plan participants. If you have any questions or concerns about this notice, please contact your NBS account representative.