Minnesota flooding: Potential tax relief if major disaster declared
MINNEAPOLIS (June 24, 2024) — Minnesota has been battered with persistent rain and subsequent flooding — historic in some parts of the state — potentially sparking a major disaster or emergency declaration by President Joe Biden.
Both declaration types authorize the president to provide supplemental federal disaster assistance.
- Emergency declarations
- Supplement state and local or Indian tribal government efforts in providing emergency services, such as the protection of lives, property, public health, and safety, or to lessen or avert the threat of a catastrophe in any part of the United States.
- Major disaster declarations
- Individual assistance declarations provide assistance to individuals and households.
- Public assistance declarations provide assistance to state, tribal and local governments and certain private nonprofit organizations for emergency work and the repair or replacement of disaster-damaged facilities.
The IRS will automatically provide
administrative disaster tax relief and special tax law provisions that grants additional time for individuals and businesses to file returns, pay taxes and perform certain other time-sensitive acts to taxpayers affected by a federally declared disaster.
The declaration, which comes after an investigation by the Federal Emergency Management Agency (FEMA), usually lags behind the disaster event by at least a month.
“I’m working closely with officials throughout the state as we continue to see rising flood waters cause damage and threaten the safety of Minnesotans," Sen. Amy Klobuchar said in a statement. "All public infrastructure damage is being documented so that if and when the federal threshold for FEMA disaster relief is reached, that relief will be delivered quickly.”
Affected taxpayers, according to the IRS, include:
- Individuals whose principal residence is located in a covered disaster area and their spouse, if filing jointly.
- Business entities or sole proprietors whose principal place of business is located in a covered disaster area.
- Relief workers affiliated with government or philanthropic organizations assisting in a covered disaster area.
- Taxpayers not located in a disaster area but whose records necessary to meet a deadline to perform certain acts are maintained or located in a covered disaster area.
- Any individual visiting a covered disaster area who was killed or injured as a result of the disaster, or any other person determined by the IRS to be affected by a federally declared disaster.
In 2017, Congress enacted special tax relief to allow for those affected by hurricanes or the California wildfires to access their retirement funds (including IRAs) up to $100,000 without paying a tax on early distributions with the caveat the distributions be repaid within three years, among other provisions.
On Saturday, June 22, Gov. Tim Walz declared a peacetime emergency, calling on the Minnesota National Guard to provide support for extreme flood conditions.
Connect with a CPA
It’s too early to say what, if any, relief may be provided to Minnesota from the federal government. The best way to stay attuned with tax relief opportunities is by connecting with your CPA.
Don’t have a CPA? Find one in your area.
The MNCPA serves the public interest by advancing the highest standards of ethics and practices within the CPA profession. The MNCPA delivers on that promise by offering extensive continuing professional education and resources; advocating for members and the public with regulatory agencies and boards; and mentoring and encouraging the CPAs and business leaders of tomorrow. Founded in 1904, the MNCPA has 7,500 members who work in public accounting, business and industry, government and education.
###
