Certain individuals and businesses within the disaster area declared by the Federal Emergency Management Association (FEMA) will have a new deadline of February 23, 2023, to file their taxes. The Internal Revenue Service (IRS) has postponed certain tax-filing and tax-payment deadlines for residents of St. Clair County who were victims of the flooding that occurred between July 25 and 28, 2022. Businesses whose principal place of business lies within the disaster area also receive an extension.
The disaster declaration applies to deadlines falling on or after July 25, 2022, and before February 15, 2023. Individuals who had a valid extension through October 17, 2022, may now file up to February 23, 2023. The IRS will also waive penalties for the late filing of or non-reporting of certain information for certain taxes for tax years 2019 and 2020 provided the person or entity files before February 15, 2023. The extension also applies to other individuals and entities based on specific filings, such as taxpayers not in the disaster area but with records necessary to meet the deadline.
Court case examines an offer in compromise
The IRS recommends individuals contacted regarding a collection matter explain how the disaster impacts them to provide consideration for their specific case. A court case highlights the importance of alerting the IRS about a change in circumstances. An individual subject to a collections due process (CDP) case petitioned the U.S. Tax Court after the IRS rejected his offer in compromise (OIC) of $10,000 and applied a notice of federal tax lien (NFTL) against him.
The IRS rejected the plaintiff’s OIC. Upon consideration that the plaintiff had equity in a home for his estranged wife and several developmentally challenged children, a second IRS settlement officer reviewed the facts and placed the appeal in “currently-not-collectible” (CNC) status. The court noted that the officer had no obligation to place the plaintiff in CNC and assessed the equity against the legal standard of an OIC—economic hardship—and upheld the NTFL.
Compliance with tax rules and regulations requires continuous oversight. A failure to meet deadlines of time or improper calculations could result in costly and burdensome tax collections that impact an individual’s or company’s bottom line. Attorneys familiar with the process of tax collections can offer guidance.