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Military turbotax 2. Military turbotax   Entertainment Table of Contents Directly-Related Test Associated TestMeetings at conventions. Military turbotax 50% LimitExceptions to the 50% Limit What Entertainment Expenses Are Deductible?A meal as a form of entertainment. Military turbotax Deduction may depend on your type of business. Military turbotax Exception for events that benefit charitable organizations. Military turbotax Food and beverages in skybox seats. Military turbotax What Entertainment Expenses Are Not Deductible?Out-of-pocket expenses. Military turbotax You may be able to deduct business-related entertainment expenses you have for entertaining a client, customer, or employee. Military turbotax The rules and definitions are summarized in Table 2-1 . Military turbotax You can deduct entertainment expenses only if they are both ordinary and necessary and meet one of the following tests. Military turbotax Directly-related test. Military turbotax Associated test. Military turbotax Both of these tests are explained later. Military turbotax An ordinary expense is one that is common and accepted in your trade or business. Military turbotax A necessary expense is one that is helpful and appropriate for your business. Military turbotax An expense does not have to be required to be considered necessary. Military turbotax The amount you can deduct for entertainment expenses may be limited. Military turbotax Generally, you can deduct only 50% of your unreimbursed entertainment expenses. Military turbotax This limit is discussed later under 50% Limit. Military turbotax Directly-Related Test To meet the directly-related test for entertainment expenses (including entertainment-related meals), you must show that: The main purpose of the combined business and entertainment was the active conduct of business, You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit at some future time. Military turbotax Business is generally not considered to be the main purpose when business and entertainment are combined on hunting or fishing trips, or on yachts or other pleasure boats. Military turbotax Even if you show that business was the main purpose, you generally cannot deduct the expenses for the use of an entertainment facility. Military turbotax See Entertainment facilities under What Entertainment Expenses Are Not Deductible? later in this chapter. Military turbotax You must consider all the facts, including the nature of the business transacted and the reasons for conducting business during the entertainment. Military turbotax It is not necessary to devote more time to business than to entertainment. Military turbotax However, if the business discussion is only incidental to the entertainment, the entertainment expenses do not meet the directly-related test. Military turbotax Table 2-1. Military turbotax When Are Entertainment Expenses Deductible? General rule You can deduct ordinary and necessary expenses to entertain a client, customer, or employee if the expenses meet the directly-related test or the associated test. Military turbotax Definitions Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation, and includes meals provided to a customer or client. Military turbotax An ordinary expense is one that is common and accepted in your trade or business. Military turbotax A necessary expense is one that is helpful and appropriate. Military turbotax Tests to be met Directly-related test Entertainment took place in a clear business setting, or Main purpose of entertainment was the active conduct of business, and You did engage in business with the person during the entertainment period, and You had more than a general expectation of getting income or some other specific business benefit. Military turbotax   Associated test Entertainment is associated with your trade or business, and Entertainment is directly before or after a substantial business discussion. Military turbotax Other rules You cannot deduct the cost of your meal as an entertainment expense if you are claiming the meal as a travel expense. Military turbotax You cannot deduct expenses that are lavish or extravagant under the circumstances. Military turbotax You generally can deduct only 50% of your unreimbursed entertainment expenses (see 50% Limit ). Military turbotax You do not have to show that business income or other business benefit actually resulted from each entertainment expense. Military turbotax Clear business setting. Military turbotax   If the entertainment takes place in a clear business setting and is for your business or work, the expenses are considered directly related to your business or work. Military turbotax The following situations are examples of entertainment in a clear business setting. Military turbotax Entertainment in a hospitality room at a convention where business goodwill is created through the display or discussion of business products. Military turbotax Entertainment that is mainly a price rebate on the sale of your products (such as a restaurant owner providing an occasional free meal to a loyal customer). Military turbotax Entertainment of a clear business nature occurring under circumstances where there is no meaningful personal or social relationship between you and the persons entertained. Military turbotax An example is entertainment of business and civic leaders at the opening of a new hotel or play when the purpose is to get business publicity rather than to create or maintain the goodwill of the persons entertained. Military turbotax Expenses not considered directly related. Military turbotax   Entertainment expenses generally are not considered directly related if you are not there or in situations where there are substantial distractions that generally prevent you from actively conducting business. Military turbotax The following are examples of situations where there are substantial distractions. Military turbotax A meeting or discussion at a nightclub, theater, or sporting event. Military turbotax A meeting or discussion during what is essentially a social gathering, such as a cocktail party. Military turbotax A meeting with a group that includes persons who are not business associates at places such as cocktail lounges, country clubs, golf clubs, athletic clubs, or vacation resorts. Military turbotax Associated Test Even if your expenses do not meet the directly-related test, they may meet the associated test. Military turbotax To meet the associated test for entertainment expenses (including entertainment-related meals), you must show that the entertainment is: Associated with the active conduct of your trade or business, and Directly before or after a substantial business discussion (defined later). Military turbotax Associated with trade or business. Military turbotax   Generally, an expense is associated with the active conduct of your trade or business if you can show that you had a clear business purpose for having the expense. Military turbotax The purpose may be to get new business or to encourage the continuation of an existing business relationship. Military turbotax Substantial business discussion. Military turbotax   Whether a business discussion is substantial depends on the facts of each case. Military turbotax A business discussion will not be considered substantial unless you can show that you actively engaged in the discussion, meeting, negotiation, or other business transaction to get income or some other specific business benefit. Military turbotax   The meeting does not have to be for any specified length of time, but you must show that the business discussion was substantial in relation to the meal or entertainment. Military turbotax It is not necessary that you devote more time to business than to entertainment. Military turbotax You do not have to discuss business during the meal or entertainment. Military turbotax Meetings at conventions. Military turbotax   You are considered to have a substantial business discussion if you attend meetings at a convention or similar event, or at a trade or business meeting sponsored and conducted by a business or professional organization. Military turbotax However, your reason for attending the convention or meeting must be to further your trade or business. Military turbotax The organization that sponsors the convention or meeting must schedule a program of business activities that is the main activity of the convention or meeting. Military turbotax Directly before or after business discussion. Military turbotax   If the entertainment is held on the same day as the business discussion, it is considered to be held directly before or after the business discussion. Military turbotax   If the entertainment and the business discussion are not held on the same day, you must consider the facts of each case to see if the associated test is met. Military turbotax Among the facts to consider are the place, date, and duration of the business discussion. Military turbotax If you or your business associates are from out of town, you must also consider the dates of arrival and departure, and the reasons the entertainment and the discussion did not take place on the same day. Military turbotax Example. Military turbotax A group of business associates comes from out of town to your place of business to hold a substantial business discussion. Military turbotax If you entertain those business guests on the evening before the business discussion, or on the evening of the day following the business discussion, the entertainment generally is considered to be held directly before or after the discussion. Military turbotax The expense meets the associated test. Military turbotax 50% Limit In general, you can deduct only 50% of your business-related meal and entertainment expenses. Military turbotax (If you are subject to the Department of Transportation's “hours of service” limits, you can deduct 80% of your business-related meal and entertainment expenses. Military turbotax See Individuals subject to “hours of service” limits , later. Military turbotax ) The 50% limit applies to employees or their employers, and to self-employed persons (including independent contractors) or their clients, depending on whether the expenses are reimbursed. Military turbotax Figure A summarizes the general rules explained in this section. Military turbotax The 50% limit applies to business meals or entertainment expenses you have while: Traveling away from home (whether eating alone or with others) on business, Entertaining customers at your place of business, a restaurant, or other location, or Attending a business convention or reception, business meeting, or business luncheon at a club. Military turbotax Included expenses. Military turbotax   Expenses subject to the 50% limit include: Taxes and tips relating to a business meal or entertainment activity, Cover charges for admission to a nightclub, Rent paid for a room in which you hold a dinner or cocktail party, and Amounts paid for parking at a sports arena. Military turbotax However, the cost of transportation to and from a business meal or a business-related entertainment activity is not subject to the 50% limit. Military turbotax Figure A. Military turbotax Does the 50% Limit Apply to Your Expenses? There are exceptions to these rules. Military turbotax See Exceptions to the 50% Limit . Military turbotax Please click here for the text description of the image. Military turbotax Figure A. Military turbotax Does the 50% limit apply to Your Expenses?TAs for Figure A are: Notice 87-23; Form 2106 instructions Application of 50% limit. Military turbotax   The 50% limit on meal and entertainment expenses applies if the expense is otherwise deductible and is not covered by one of the exceptions discussed later. Military turbotax   The 50% limit also applies to certain meal and entertainment expenses that are not business related. Military turbotax It applies to meal and entertainment expenses you have for the production of income, including rental or royalty income. Military turbotax It also applies to the cost of meals included in deductible educational expenses. Military turbotax When to apply the 50% limit. Military turbotax   You apply the 50% limit after determining the amount that would otherwise qualify for a deduction. Military turbotax You first have to determine the amount of meal and entertainment expenses that would be deductible under the other rules discussed in this publication. Military turbotax Example 1. Military turbotax You spend $200 for a business-related meal. Military turbotax If $110 of that amount is not allowable because it is lavish and extravagant, the remaining $90 is subject to the 50% limit. Military turbotax Your deduction cannot be more than $45 (50% × $90). Military turbotax Example 2. Military turbotax You purchase two tickets to a concert and give them to a client. Military turbotax You purchased the tickets through a ticket agent. Military turbotax You paid $200 for the two tickets, which had a face value of $80 each ($160 total). Military turbotax Your deduction cannot be more than $80 (50% × $160). Military turbotax Exceptions to the 50% Limit Generally, business-related meal and entertainment expenses are subject to the 50% limit. Military turbotax Figure A can help you determine if the 50% limit applies to you. Military turbotax Expenses not subject to 50% limit. Military turbotax   Your meal or entertainment expense is not subject to the 50% limit if the expense meets one of the following exceptions. Military turbotax 1 - Employee's reimbursed expenses. Military turbotax   If you are an employee, you are not subject to the 50% limit on expenses for which your employer reimburses you under an accountable plan. Military turbotax Accountable plans are discussed in chapter 6. Military turbotax 2 - Self-employed. Military turbotax   If you are self-employed, your deductible meal and entertainment expenses are not subject to the 50% limit if all of the following requirements are met. Military turbotax You have these expenses as an independent contractor. Military turbotax Your customer or client reimburses you or gives you an allowance for these expenses in connection with services you perform. Military turbotax You provide adequate records of these expenses to your customer or client. Military turbotax (See chapter 5 . Military turbotax )   In this case, your client or customer is subject to the 50% limit on the expenses. Military turbotax Example. Military turbotax You are a self-employed attorney who adequately accounts for meal and entertainment expenses to a client who reimburses you for these expenses. Military turbotax You are not subject to the directly-related or associated test, nor are you subject to the 50% limit. Military turbotax If the client can deduct the expenses, the client is subject to the 50% limit. Military turbotax If you (as an independent contractor) have expenses for meals and entertainment related to providing services for a client but do not adequately account for and seek reimbursement from the client for those expenses, you are subject to the directly-related or associated test and to the 50% limit. Military turbotax 3 - Advertising expenses. Military turbotax   You are not subject to the 50% limit if you provide meals, entertainment, or recreational facilities to the general public as a means of advertising or promoting goodwill in the community. Military turbotax For example, neither the expense of sponsoring a television or radio show nor the expense of distributing free food and beverages to the general public is subject to the 50% limit. Military turbotax 4 - Sale of meals or entertainment. Military turbotax   You are not subject to the 50% limit if you actually sell meals, entertainment, goods and services, or use of facilities to the public. Military turbotax For example, if you run a nightclub, your expense for the entertainment you furnish to your customers, such as a floor show, is not subject to the 50% limit. Military turbotax 5 - Charitable sports event. Military turbotax   You are not subject to the 50% limit if you pay for a package deal that includes a ticket to a qualified charitable sports event. Military turbotax For the conditions the sports event must meet, see Exception for events that benefit charitable organizations under What Entertainment Expenses Are Deductible?, later. Military turbotax Individuals subject to “hours of service” limits. Military turbotax   You can deduct a higher percentage of your meal expenses while traveling away from your tax home if the meals take place during or incident to any period subject to the Department of Transportation's “hours of service” limits. Military turbotax The percentage is 80%. Military turbotax   Individuals subject to the Department of Transportation's “hours of service” limits include the following persons. Military turbotax Certain air transportation workers (such as pilots, crew, dispatchers, mechanics, and control tower operators) who are under Federal Aviation Administration regulations. Military turbotax Interstate truck operators and bus drivers who are under Department of Transportation regulations. Military turbotax Certain railroad employees (such as engineers, conductors, train crews, dispatchers, and control operations personnel) who are under Federal Railroad Administration regulations. Military turbotax Certain merchant mariners who are under Coast Guard regulations. Military turbotax What Entertainment Expenses Are Deductible? This section explains different types of entertainment expenses you may be able to deduct. Military turbotax Entertainment. Military turbotax   Entertainment includes any activity generally considered to provide entertainment, amusement, or recreation. Military turbotax Examples include entertaining guests at nightclubs; at social, athletic, and sporting clubs; at theaters; at sporting events; on yachts; or on hunting, fishing, vacation, and similar trips. Military turbotax   Entertainment also may include meeting personal, living, or family needs of individuals, such as providing meals, a hotel suite, or a car to customers or their families. Military turbotax A meal as a form of entertainment. Military turbotax   Entertainment includes the cost of a meal you provide to a customer or client, whether the meal is a part of other entertainment or by itself. Military turbotax A meal expense includes the cost of food, beverages, taxes, and tips for the meal. Military turbotax To deduct an entertainment-related meal, you or your employee must be present when the food or beverages are provided. Military turbotax    You cannot claim the cost of your meal both as an entertainment expense and as a travel expense. Military turbotax    Meals sold in the normal course of your business are not considered entertainment. Military turbotax Deduction may depend on your type of business. Military turbotax   Your kind of business may determine if a particular activity is considered entertainment. Military turbotax For example, if you are a dress designer and have a fashion show to introduce your new designs to store buyers, the show generally is not considered entertainment. Military turbotax This is because fashion shows are typical in your business. Military turbotax But, if you are an appliance distributor and hold a fashion show for the spouses of your retailers, the show generally is considered entertainment. Military turbotax Separating costs. Military turbotax   If you have one expense that includes the costs of entertainment and other services (such as lodging or transportation), you must allocate that expense between the cost of entertainment and the cost of other services. Military turbotax You must have a reasonable basis for making this allocation. Military turbotax For example, you must allocate your expenses if a hotel includes entertainment in its lounge on the same bill with your room charge. Military turbotax Taking turns paying for meals or entertainment. Military turbotax   If a group of business acquaintances takes turns picking up each others' meal or entertainment checks primarily for personal reasons, without regard to whether any business purposes are served, no member of the group can deduct any part of the expense. Military turbotax Lavish or extravagant expenses. Military turbotax   You cannot deduct expenses for entertainment that are lavish or extravagant. Military turbotax An expense is not considered lavish or extravagant if it is reasonable considering the facts and circumstances. Military turbotax Expenses will not be disallowed just because they are more than a fixed dollar amount or take place at deluxe restaurants, hotels, nightclubs, or resorts. Military turbotax Allocating between business and nonbusiness. Military turbotax   If you entertain business and nonbusiness individuals at the same event, you must divide your entertainment expenses between business and nonbusiness. Military turbotax You can deduct only the business part. Military turbotax If you cannot establish the part of the expense for each person participating, allocate the expense to each participant on a pro rata basis. Military turbotax Example. Military turbotax You entertain a group of individuals that includes yourself, three business prospects, and seven social guests. Military turbotax Only 4/11 of the expense qualifies as a business entertainment expense. Military turbotax You cannot deduct the expenses for the seven social guests because those costs are nonbusiness expenses. Military turbotax Trade association meetings. Military turbotax   You can deduct entertainment expenses that are directly related to and necessary for attending business meetings or conventions of certain exempt organizations if the expenses of your attendance are related to your active trade or business. Military turbotax These organizations include business leagues, chambers of commerce, real estate boards, trade associations, and professional associations. Military turbotax Entertainment tickets. Military turbotax   Generally, you cannot deduct more than the face value of an entertainment ticket, even if you paid a higher price. Military turbotax For example, you cannot deduct service fees you pay to ticket agencies or brokers or any amount over the face value of the tickets you pay to scalpers. Military turbotax Exception for events that benefit charitable organizations. Military turbotax   Different rules apply when the cost of a ticket to a sports event benefits a charitable organization. Military turbotax You can take into account the full cost you pay for the ticket, even if it is more than the face value, if all of the following conditions apply. Military turbotax The event's main purpose is to benefit a qualified charitable organization. Military turbotax The entire net proceeds go to the charity. Military turbotax The event uses volunteers to perform substantially all the event's work. Military turbotax    The 50% limit on entertainment does not apply to any expense for a package deal that includes a ticket to such a charitable sports event. Military turbotax Example 1. Military turbotax You purchase tickets to a golf tournament organized by the local volunteer fire company. Military turbotax All net proceeds will be used to buy new fire equipment. Military turbotax The volunteers will run the tournament. Military turbotax You can deduct the entire cost of the tickets as a business expense if they otherwise qualify as an entertainment expense. Military turbotax Example 2. Military turbotax You purchase tickets to a college football game through a ticket broker. Military turbotax After having a business discussion, you take a client to the game. Military turbotax Net proceeds from the game go to colleges that qualify as charitable organizations. Military turbotax However, since the colleges also pay individuals to perform services, such as coaching and recruiting, you can only use the face value of the tickets in determining your business deduction. Military turbotax Skyboxes and other private luxury boxes. Military turbotax   If you rent a skybox or other private luxury box for more than one event at the same sports arena, you generally cannot deduct more than the price of a nonluxury box seat ticket. Military turbotax   To determine whether a skybox has been rented for more than one event, count each game or other performance as one event. Military turbotax For example, renting a skybox for a series of playoff games is considered renting it for more than one event. Military turbotax All skyboxes you rent in the same arena, along with any rentals by related parties, are considered in making this determination. Military turbotax   Related parties include: Family members (spouses, ancestors, and lineal descendants), Parties who have made a reciprocal arrangement involving the sharing of skyboxes, Related corporations, A partnership and its principal partners, and A corporation and a partnership with common ownership. Military turbotax Example. Military turbotax You pay $3,000 to rent a 10-seat skybox at Team Stadium for three baseball games. Military turbotax The cost of regular nonluxury box seats at each event is $30 a seat. Military turbotax You can deduct (subject to the 50% limit) $900 ((10 seats × $30 each) × 3 events). Military turbotax Food and beverages in skybox seats. Military turbotax   If expenses for food and beverages are separately stated, you can deduct these expenses in addition to the amounts allowable for the skybox, subject to the requirements and limits that apply. Military turbotax The amounts separately stated for food and beverages must be reasonable. Military turbotax You cannot inflate the charges for food and beverages to avoid the limited deduction for skybox rentals. Military turbotax What Entertainment Expenses Are Not Deductible? This section explains different types of entertainment expenses you generally may not be able to deduct. Military turbotax Club dues and membership fees. Military turbotax   You cannot deduct dues (including initiation fees) for membership in any club organized for: Business, Pleasure, Recreation, or Other social purpose. Military turbotax This rule applies to any membership organization if one of its principal purposes is either: To conduct entertainment activities for members or their guests, or To provide members or their guests with access to entertainment facilities, discussed later. Military turbotax   The purposes and activities of a club, not its name, will determine whether or not you can deduct the dues. Military turbotax You cannot deduct dues paid to: Country clubs, Golf and athletic clubs, Airline clubs, Hotel clubs, and Clubs operated to provide meals under circumstances generally considered to be conducive to business discussions. Military turbotax Entertainment facilities. Military turbotax   Generally, you cannot deduct any expense for the use of an entertainment facility. Military turbotax This includes expenses for depreciation and operating costs such as rent, utilities, maintenance, and protection. Military turbotax   An entertainment facility is any property you own, rent, or use for entertainment. Military turbotax Examples include a yacht, hunting lodge, fishing camp, swimming pool, tennis court, bowling alley, car, airplane, apartment, hotel suite, or home in a vacation resort. Military turbotax Out-of-pocket expenses. Military turbotax   You can deduct out-of-pocket expenses, such as for food and beverages, catering, gas, and fishing bait, that you provided during entertainment at a facility. Military turbotax These are not expenses for the use of an entertainment facility. Military turbotax However, these expenses are subject to the directly-related and associated tests and to the 50% limit , all discussed earlier. Military turbotax Expenses for spouses. Military turbotax   You generally cannot deduct the cost of entertainment for your spouse or for the spouse of a customer. Military turbotax However, you can deduct these costs if you can show you had a clear business purpose, rather than a personal or social purpose, for providing the entertainment. Military turbotax Example. Military turbotax You entertain a customer. Military turbotax The cost is an ordinary and necessary business expense and is allowed under the entertainment rules. Military turbotax The customer's spouse joins you because it is impractical to entertain the customer without the spouse. Military turbotax You can deduct the cost of entertaining the customer's spouse. Military turbotax If your spouse joins the party because the customer's spouse is present, the cost of the entertainment for your spouse is also deductible. Military turbotax Gift or entertainment. Military turbotax   Any item that might be considered either a gift or entertainment generally will be considered entertainment. Military turbotax However, if you give a customer packaged food or beverages that you intend the customer to use at a later date, treat it as a gift. Military turbotax   If you give a customer tickets to a theater performance or sporting event and you do not go with the customer to the performance or event, you have a choice. Military turbotax You can treat the tickets as either a gift or entertainment, whichever is to your advantage. Military turbotax   You can change your treatment of the tickets at a later date by filing an amended return. Military turbotax Generally, an amended return must be filed within 3 years from the date the original return was filed or within 2 years from the time the tax was paid, whichever is later. Military turbotax   If you go with the customer to the event, you must treat the cost of the tickets as an entertainment expense. Military turbotax You cannot choose, in this case, to treat the tickets as a gift. Military turbotax Prev  Up  Next   Home   More Online Publications
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Tax Relief for Victims of Hurricane Isaac in Louisiana

LA/MS-2012-15, Sept. 5, 2012

Updated 10/22/12 to include Pointe Coupee and West Baton Rouge parishes

Updated 10/3/12 to include Allen, Morehouse and St. Martin parishes

Updated 9/17/12 to include East Baton Rouge, East Feliciana and West Feliciana parishes.

Updated 9/10/12 to include Assumption, Iberville, St. Helena, St. James, St. Mary, Tangipahoa, Terrebonne, and Washington parishes.

NEW ORLEANS — Victims of Hurricane Isaac that began on Aug. 26, 2012 in parts of Louisiana may qualify for tax relief from the Internal Revenue Service.

Following recent disaster declarations for individual assistance issued by the Federal Emergency Management Agency, the IRS announced today that affected taxpayers in Louisiana will receive tax relief, and other locations may be added in coming days based on additional damage assessments by FEMA.

The President has declared the parishes of Allen, Ascension, Assumption, East Baton Rouge, East Feliciana, Iberville, Jefferson, Lafourche, Livingston, Morehouse, Orleans, Plaquemines, Pointe Coupee, St. Bernard, St. Charles, St. Helena, St. James, St. John the Baptist, St. Martin, St. Mary,  St. Tammany,  Tangipahoa, Terrebonne, Washington,  West Baton Rouge and West Feliciana a federal disaster area. Individuals who reside or have a business in these parishes may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after Aug. 26, and on or before Jan. 11, 2013, have been postponed to Jan. 11, 2013. This includes the quarterly estimated tax payment due on Sept. 17, 2012.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after Aug. 26, and on or before Sept. 10, as long as the deposits are made by Sept. 10, 2012.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Covered Disaster Area

The parishes listed above constitutes a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and is entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose records necessary to meet a deadline listed in Treas. Reg. § 301.7508A-1(c) are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area and any individual visiting the covered disaster area who was killed or injured as a result of the disaster are entitled to relief.

Grant of Relief

Under section 7508A, the IRS gives affected taxpayers until Jan. 11, 2013, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date occurring on or after Aug. 26 and on or before Jan. 11, 2013.

The IRS also gives affected taxpayers until Jan. 11, 2013, to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2007-56, 2007-34 I.R.B. 388 (Aug. 20, 2007), that are due to be performed on or after Aug. 26 and on or before Jan. 11, 2013.

This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2007-56. The relief described in section 17 of Rev. Proc. 2007-56, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise tax deposits due on or after Aug. 26 and on or before Sept. 10 provided the taxpayer makes these deposits by Sept. 10.

Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year's return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements. For details, see Form 4684 and its instructions.

Affected taxpayers claiming the disaster loss on last year's return should put the Disaster Designation “LOUISIANA/HURRICANE ISAAC” at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers. Taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, Request for Copy of Tax Return, or Form 4506-T, Request for Transcript of Tax Return, as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from the official IRS website, IRS.gov, or order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

Page Last Reviewed or Updated: 18-Sep-2013

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