Oct 15, 2023 IRS Relief for Taxpayers Affected by the Terror Attack in Israel on October 7th, 2023
The IRS, in a rare occurrence, came out over the weekend with a special notice targeting those affected in Israel by the recent events and the ongoing war. These taxpayers now have until October 7, 2024, to file certain Federal tax returns, make tax payments, and complete other time-sensitive tax-related actions. While we are dealing with a challenging time, it is a much-needed reprieve provided by the US government and one we gratefully welcome.
The IRS notice itself is short, and you can read the full text of Notice 2023-71 here. We break down the most important items for you below and some of the frequently asked questions we have been receiving.
Q: Who qualifies as an ‘affected taxpayer’ under this notice?
A: Affected taxpayers include:
– Individuals whose main residence is in Israel.
– Businesses or sole proprietors with their primary location in the aforementioned areas.
– Individuals working with recognized governmental or philanthropic organizations aiding in the impacted areas.
– Those whose tax records or tax return preparers are based in the affected regions.
– Spouses filing joint returns with affected taxpayers.
– Visitors to the covered areas who suffered due to the terroristic actions.
Q: So when is my 2022 US tax return due?
A: Anyone who had an extension until October 15th now has an automatic extension to file until October 7th, 2024 (almost an entire extra year).
Q: What if I live in the US, but my accountant is in Israel?
A: The IRS allows an extension if either the taxpayer or their preparer lives in Israel. This allows all clients of Philip Stein & Associates this automatic extension.
Q: How will the IRS know that I get this extension?
A: The IRS claims to be able to tell themselves based on prior year information. This may be the address used on the tax return or the address of the tax preparer. We generally tend not to leave this in the hands of the IRS, though, and if relying on this extension, we will be attaching a statement to your tax return when it is filed.
Q: What about if I use a US address on my tax return?
A: The IRS may use the address of the tax preparer, “Philip Stein & Associates,” and we will include a letter with your tax return. This should assist the IRS in knowing that you are eligible for the extension. In any case, we anticipate that we will get some notices for taxpayers that will need to be responded to.
Q: Does that mean that Philip Stein & Associates is not working on my tax return right now?
A: We are still working under “business as usual” presumptions. If you have provided your documents/information, rest assured that we are working on your tax forms and will be in touch as soon as they are ready. We do ask for your patience as some of our staff have been called up, and the war is affecting us all in one form or another.
It is hard to assess what will be in the near future, but we will keep you updated.
Q: Does this extension include my FBAR filing?
A: On October 16th FinCEN sent out a separate notice extending the FBAR deadline to October 7th, 2024. This means that FBARs are now also extended.
Q: What about other tax forms, like the Form 5472 or Form 3520?
A: The relief covers a range of tax actions, including the filing of certain forms. The above forms are generally included and will be extended until October 7th, 2024. If you have specific forms that you are unsure about, please contact your associate.
Q: Does this extra time also apply to my state tax returns?
A: This notice specifically relates to federal taxes. Each state individually may or may not conform to the Federal extension and needs to be looked into individually.
Q: What if I owe tax on my 2022 tax return? Does this allow me more time to pay that tax?
A: This extension gives you more time to file your tax return but does not give you more time to pay in your taxes. Since taxes were originally due June 15th, there will still be interest and late payment penalties accruing until the tax is paid in. Late filing penalties are pushed off, though, and this is a tremendous help and weight lifted off.
Q: Will this change when I need to make my estimated tax payments for 2023?
A: Yes, while the first three payments were necessary already, the fourth payment and your extension payments may be delayed until October 7th, 2024. It is still a good idea to speak to your associate and pay any estimated 2023 taxes as early as possible to avoid other penalties from applying.
Q: Does this relief also apply to the IRS’s actions?
A: Yes. The IRS is also postponing certain time-sensitive actions, like assessing taxes or collecting tax amounts due, until October 7, 2024.
Q: Can I wait to contribute to my IRA?
A: Yes, you can. The relief includes postponing the time for making contributions to a qualified retirement plan like an IRA.
Q: Where can I get more information or assistance on this?
A: For detailed information, you can refer to the IRS Notice 2023-71. Additionally, our dedicated team at Philip Stein & Associates is here to assist and guide you. Reach out to us with your specific queries.
The information provided in the above blog post is intended for general informational purposes only and does not constitute legal, tax, or financial advice. While every effort has been made to ensure the accuracy and reliability of the information provided, Philip Stein & Associates assumes no responsibility for any errors or omissions, or for the results obtained from the use of this information. Readers are encouraged to seek personalized advice from qualified professionals regarding their individual circumstances before making any decisions based on the information provided in this post.