Monday, March 10, 1997
IRS, states vow
to extend deadlines

The Cincinnati Enquirer

Add the Internal Revenue Service to the roster of government agencies coming to the aid of flood victims.

Because last week's floods struck in the middle of tax-preparation season, Ohio and federal tax authorities Friday extended various deadlines for flood victims to file their returns. The IRS also said it would delay notices, expedite refunds and suspend all examination and collection activities for flood victims through at least April 7.

Officials with the Kentucky Revenue Cabinet said they would piggyback Ohio with an announcement on deadline extensions and other tax relief today. As of late Friday, a spokeswoman for the Indiana Department of Revenue said her office was awaiting word of a tax-relief statement from Gov. Frank O'Bannon.

IRS representatives are being dispatched to Federal Emergency Management Agency (FEMA) recovery centers to offer tax information in disaster recovery kits.

''We sympathize with those who are suffering from this tragedy and don't want them to have additional worries about tax issues,'' said C. Ashley Bullard, IRS district director for Ohio.

The relief could prove particularly helpful for those who already have filed their 1996 returns - or are about to file - and want to amend the return to claim flood-related losses.

That means a tax reimbursement could be sent back within a few weeks.

''We don't know exactly how long, but it's going to be very quick,'' IRS spokeswoman Teri Dixon said.

To expedite a return, flood victims are being told to mark ''March flood'' on their returns and on the outside of the envelope.

Federal disaster law gives taxpayers the option of filing for the flood losses in the year they occurred or in the prior tax year.

''But individuals should consider that choice carefully, because it is generally irrevocable,'' Ms. Dixon said.

The advantage of waiting until 1997 taxes are due comes into play for those who expect their income to drop off this year.

Under the tax code, the amount of losses one can claim are reduced by 10 percent of adjusted gross income.

In other words, the more you earn in a given year, the less you can deduct for flood damage.

Among other deadlines being pushed back, the IRS said taxpayers whose returns are due March 15 will not be penalized if they file by April 15.

Farmers, fishermen and others who had until March 15 to pay a balance on an estimated tax due will now have until April 15. By law, the IRS cannot extend deadlines for employment or excise tax deposits, but it is abating penalties on tax deposits due from March 2 to March 15 as long as those taxes are deposited by March 31.

The length of the filing extensions for state taxes might vary depending on individual circumstances.

''It's not going to be cut and dried,'' Julie Carpenter of the Ohio Department of Taxation said. ''Some people may have lost their records at the bottom of the river. Others might just need a new W-2.''

No matter when victims plan to claim losses, local accountants suggest that they act immediately to get their tax house in order.

Crystal Faulkner of Rippe & Kingston Co. suggests that one of the first steps should be hiring an appraiser to determine the value of a damaged home or business.

''You want to be able to prove the actual loss,'' she said, ''and generally, they will give a lot of reliance on an appraiser.''

Some other tax tips that could come in handy for insurance purposes:

Keep accurate records to support your deduction.

Photograph or shoot video of the damage.

For businesses - remember to calculate lost profits in addition to any damaged inventory and property.

If damaged property was used for both personal and business uses, calculate the losses separately.

For instance, if a destroyed car was used half the time for business, then half of the insurance payment will be used in computing business losses.


To receive tax forms

Federal: To order a federal disaster tax kit, call (800) 829-3676 or pick up a kit at one of three area walk-in offices for the Internal Revenue Service: 550 Main St. in downtown Cincinnati; 487 Circle Freeway Drive in Tri-County; and 612 Sixth St. in Portsmouth, Ohio.

For technical questions about computing losses, call (800) 829-1040.

Ohio: Contact your nearest district office of the Ohio De
partment of Taxation. In Cincinnati, call 852-3311.

Kentucky: Call the Kentucky Revenue Cabinet in Frankfort at (502) 564-4581 or the Northern Kentucky Taxpayer Service Center in Fort Mitchell at (606) 292-6603.

Indiana: Call the Indiana Department of Revenue's district office in Clarksville at (812) 282-7729 or the Department of Revenue in Indianapolis at (317) 232-2240.

Comments? Questions? Criticisms? Contact Greg Noble, online editor.
Entire contents Copyright (c) 1997 by The Cincinnati Enquirer, a Gannett Co. Inc. newspaper.