Treasury Notes

 Treasury Provides Assistance, Relief For Individuals And Businesses Affected By Hurricane Sandy

By: Nani Coloretti

As part of the Administration’s efforts to bring all available resources to bear to support state and local partners, the U.S. Department of the Treasury and its bureaus are providing a broad array of assistance to individuals and businesses impacted by Hurricane Sandy. Since the storm, Treasury has reminded servicers of existing mortgage forbearance, and activated and authorized housing and other tax relief programs to ease burdens on those affected. The following outlines a number of specific ways Treasury is supporting affected individuals and businesses.

Mortgage Forbearance

Earlier this week, Treasury provided guidance to mortgage servicers participating in the Making Home Affordable Program about options available to homeowners affected by Hurricane Sandy.  Under the program's guidelines, servicers must offer a minimum of three months forbearance to any Making Home Affordable-eligible homeowner who requests a forbearance and whose property or principal place of business or employment is located in an area designated by the Federal Emergency Management Agency (FEMA) as being covered by the disaster as set forth at or as confirmed by a local FEMA office. There are currently more than 60,000 homeowners participating in the Making Home Affordable Program in the New York metropolitan area.

Additionally, if a homeowner is being considered for or has received assistance under the Making Home Affordable Program and misses one or more mortgage payments, Treasury has directed servicers not to take any action that would adversely affect eligibility for the program unless there is contact with the homeowner to establish whether he or she requires forbearance.

Treasury has also encouraged participating servicers to make extra effort to reach out to homeowners who may be eligible for assistance in impacted areas and allow homeowners additional time to respond and provide necessary documentation. 

Here are tax relief measures taken to assist those affected by Hurricane Sandy:

Tax Relief

Postponed Filing Deadlines: For affected taxpayers in Connecticut, New Jersey, and New York, the IRS has postponed various filing and payment deadlines.  As a result, affected individuals and businesses will have until February 1, 2013, to file the fourth quarter individual estimated tax payment, normally due January 15, 2013, and payroll and excise tax returns and accompanying payments for the third and fourth quarters, normally due on October 31, 2012, and January 31, 2013, respectively.  It also applies to tax-exempt organizations required to file Form 990 series returns with an original or extended deadline falling during this period.  

Leave-Based Donation Programs:  Under these programs, employees may donate their vacation, sick, or personal leave in exchange for employer cash payments made to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy.  Employees can forgo leave in exchange for employer cash payments made before January 1, 2014.  The donated leave will not be included in the income or wages of the employees, and employers will be permitted to deduct the amount of the cash payment.

Low-Income Housing Tax Credit Waivers: Because of the widespread devastation to housing caused by Hurricane Sandy, IRS announced that they will temporarily waive the income limitation and non-transient requirements of the low-income housing tax credit (LIHTC) rules for qualified low-income housing projects that provide housing to those affected by Hurricane Sandy.

Disaster Relief Payments Excluded from Taxable Income: Because Hurricane Sandy is designated as a qualified disaster for federal tax purposes, the IRS has alerted employers and other taxpayers that qualified disaster relief payments made to individuals by their employer or any person can be excluded from those individuals’ taxable income.  These payments include amounts to cover necessary personal, family, living, or funeral expenses that were not covered by insurance.  They also include expenses to repair or rehabilitate personal residences or repair or replace the contents to the extent that they were not covered by insurance.

Diesel Fuel Penalties: In response to shortages of clear diesel fuel caused by Hurricane Sandy, the IRS will not impose a tax penalty when dyed diesel fuel is sold for use or used on the highways in New Jersey, New York, and Pennsylvania through November 20, 2012.  This penalty relief is available to any person who sells or uses dyed fuel for highway use.  Ordinarily, dyed diesel fuel is not taxed, because it is sold for uses exempt from excise tax, such as to farmers for farming purposes, for home heating use, and to local governments for public transportation. Similarly, IRS will not impose a tax penalty on a failure to meet the requirements of EPA highway diesel fuel sulfur content regulations if EPA has waived those requirements.

Expedited Tax-Exempt Status: While Treasury encourages people to use existing organizations currently working on immediate aid efforts, the IRS has agreed to provide expedited review and approval for organizations seeking tax-exempt status to provide relief for victims of Hurricane Sandy.  Organizations seeking tax-exempt status can apply by filing IRS Form 1023 and write at the top of the form “Disaster Relief, Hurricane Sandy.”  The IRS will give such applications expedited attention to ensure they meet legal requirements.  Organizations seeking to provide relief for victims of Hurricane Sandy that have already submitted an application can fax a request labeled "Disaster Relief, Hurricane Sandy" that includes the organization's name, Employer Identification Number, contact name, and phone number to 513-263-4554 to be given the same expedited handling. 

As the response and recovery moves forward, Treasury will continue to provide assistance and support for affected residents and business owners as they rebuild their communities. 

Nani Coloretti is the acting Assistant Secretary for Management at the U.S. Department of the Treasury.

Posted in:  Hurricane Relief
Bookmark and Share