Similar to action taken a few weeks ago in response to Hurricane Harvey, the IRS and DOL both recently published guidance containing certain relief for those individuals and businesses in Hurricane Irma’s path.
The IRS offered extensions in relation to certain tax filing deadlines. The extensions apply automatically to any individual or business in an area designated by the Federal Emergency Management Agency (FEMA) as qualifying for individual assistance. Parts of Florida, Puerto Rico and the U.S. Virgin Islands are currently eligible, but taxpayers in localities added later to the disaster area, including those in other states, will automatically receive the same filing and payment relief. As a result, if a form was due on or after Sept. 4, 2017 (as for Florida) or Sept. 5, 2017 (as for Puerto Rico and the U.S. Virgin Islands), the form is now due on Jan. 31, 2018. The relief would apply to quarterly payroll/employment/excise tax filings due, as well as for any employers that may have previously applied for a Form 5500 filing extension.
The IRS also published Notice 2017-52, which provides guidance on the treatment of cash payments made by employers under leave-based donation programs to aid Hurricane and Tropical Storm Irma victims. Generally, under leave-based donation programs, employees can elect to forego vacation, sick or personal leave in exchange for cash payments that the employer makes to a charitable organization. According to the notice, the IRS will not assert that cash payments made under leave-based donation programs constitute income or wages of the employees if the payments are made to the charitable organizations for the relief of victims of Hurricane and Tropical Storm Irma and are made before Jan. 1, 2019. Employers should work with tax counsel or their CPA in determining the appropriate tax accounting and reporting for those types of cash payment contributions.
In a press release, the DOL introduced Hurricane Irma-related employee benefit plan compliance guidance and relief that parallels guidance and relief provided regarding Hurricane Harvey. Referencing that relief, employers and plans are encouraged to make reasonable accommodations to prevent the loss of benefits for participants and beneficiaries affected by Hurricane Irma. Examples include a delay on filing a benefit claim or in providing a COBRA election notice. The DOL also explained that its compliance enforcement strategy will emphasize compliance assistance where the situation proves impossible or difficult due to the aftermath of Hurricane Irma. In other words, the DOL will be understanding in compliance challenges and delays that arise out of complications from the hurricane.
Following Hurricane Harvey, the DOL published FAQs for plan participants and beneficiaries that offers advice for those who may have complications with their health insurance or retirement plans in the face of Hurricane Harvey. That Harvey-specific FAQ document is also referenced as a useful resource in the DOL’s Irma-related press release. Employers with employees impacted by Hurricane Irma may want to refer to the FAQs to help address questions from employees attempting to recover.
For retirement plans, IRS Announcement 2017-13 permits retirement plans to provide loans and hardship distributions for those impacted by Hurricane Irma, so long as certain requirements are met. Specifically, to be eligible for such a loan/distribution, on Sept. 4, 2017 (as for Florida) or Sept. 5, 2017 (as for Puerto Rico and the U.S. Virgin Islands), the individual must have had a principal residence or place of employment in an area designated by FEMA for individual assistance due to Hurricane Irma. Alternatively, an individual is eligible if they have a lineal ascendant or descendant (i.e., grandchild, parent or grandparent), dependent or spouse with a principal residence or place of employment in the affected area. The loan/distribution must be made no later than Jan. 31, 2018. While loans/distributions made pursuant to Announcement 2017-13 are excused from some IRS rules, others – including maximum amounts and other loan requirements – remain in place. Plans that want to make disaster-related loans/distributions have until the end of the first plan year beginning after Dec. 31, 2017, to make appropriate plan amendments.
The IRS and DOL guidance is particularly helpful for Florida, Puerto Rico and U.S. Virgin Island employers that may have been impacted by Hurricane Irma. Those employers should work with their advisor/account management team and, in some instances, outside counsel for specific questions relating to the guidance and relief.
IRS IR 2017-150 »
IRS FL 2017-04 »
IRS PR 2017-01 »
IRS VI 2017-01 »
IRS IR-2017-154 »
IRS Notice 2017-52 »
DOL News Release »
IRS IR 2017-151 »
IRS Announcement 2017-13 »