AICPA Hurricane Sandy Relief Comments to IRS

7/31/2019 AICPA Hurricane Sandy Relief Comments to IRS

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November 1, 2012

The Honorable Douglas H. Shulman

CommissionerInternal Revenue Service

1111 Constitution Avenue, NW

Washington, DC 20224

Re: Request for Further Relief Due to Hurricane Sandy for Various Tax and InformationReturns and Payments Otherwise Due November 15, 2012 and Beyond

Dear Commissioner Shulman:

The American Institute of Certified Public Accountants (AICPA) and its members truly

appreciate the quick action of the Internal Revenue Service (IRS) to release IR-2012-82 onOctober 31, 2012 regarding the additional time provided to various taxpayers and preparers

affected by Hurricane Sandy to file returns and accompanying payments that would

normally be due by October 31, 2012, to file and pay by November 7, 2012.

IR-2012-82 indicates that the IRS expects to grant additional filing and payment relief as

qualifying disaster declarations are issued by the Federal Emergency Management Agency

(FEMA). Given the size of this storm and the wide-spread areas that have experienceddamage as a result, it may take quite some time for FEMA to make all of those declarations.

This is an extraordinary situation. While the full level of destruction remains to be seen anddetermined, the fact is that much of the damage has occurred in areas not used to dealing

with storms of this magnitude. The region is densely populated. There have been

unprecedented events such as New York City completely shutting down mass transit forover three days (with some parts to remain shut for a week or more), the federal government

in Washington, DC closing for two days with mass transit in the metro DC area closed for aday and a half, and so much more. Some of our members are experiencing disruptions of

utilities at their residences and offices. Many do not have electricity, phone or internetservice, and do not know when those services will be available to them. Those utilities and

services are just some of the important tools used to gather the necessary information,

prepare, and file tax and information returns and payments. This situation merits anextraordinary response from the IRS FEMA declaration or not.


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The Honorable Douglas H. ShulmanNovember 1, 2012

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We understand that the IRS has authority through administrative pronouncement via press

release to grant relief for filing deadlines for those individuals in affected areas. We hope

that the IRS considers some amount of broader relief than typically provided in disasters.At a minimum, any relief should at least consider factors such as where the taxpayer is

located, where the taxpayers preparer is located, and where the taxpayers records are

located. If any of those locations fall within the areas impacted by Hurricane Sandy, werequest that the relief be extended to those items. However, the impacts of this hurricane

have been, and continue to be so broad, that some additional relief is warranted for many

situations. In IR-2011-88, IRS provided preparer relief for taxpayers affected by Hurricane

Irene that went beyond the relief in federally declared disaster areas, setting a precedent toproviding similar relief now for victims of Hurricane Sandy.

Specific Relief for Exempt Organizations

As IRS works on additional tax filing relief, we ask that you pay particular attention to thevarious returns of exempt organizations that have some significant deadlines quickly

approaching. Some examples of returns and payments due on November 15, 2012 include:

Calendar 2011 filings of Form 990, Return of Organization Exempt from IncomeTax, Form 990-EZ, Short Form Return of Organization Exempt from Income Tax,

and Form 990-PF, Return of Private Foundation or Section 4947(a)(1) Nonexempt

Charitable Trust Treated as a Private Foundation, where the organization requestedand received a second extension of time to file. This is the final deadline no

further extensions are typically available.

Calendar 2011 filings of Form 990-T, Exempt Organization Business Income TaxReturn (and proxy tax under section 6033(e)), where the organization previouslyextended the return.

Fiscal year ended March 31, 2012 filings of Form 990, Form 990-EZ, and Form 990-PF. These organizations can request a second extension of time to file, however

such extension is not automatic and requires IRS approval.

Fiscal year ended June 30, 2012 filings of Form 990, Form 990-EZ, Form 990-PF,and Form 990-T. These organizations will need to file for the first extension request

by November 15, 2012.

First quarter estimated tax payments for Forms 990 and 990-PF for fiscal yearending June 30, 2013 entities.

Many of these exempt organizations and their employees, volunteers, and tax preparers or

other advisors may have been located in geographical areas that were (and continue to be)affected by Hurricane Sandy. Other exempt organizations outside those geographical areas

may also be impacted in the short term due to the many transportation, utility, and

communication disruptions felt throughout the entire United States. Further, many exemptorganizations are actually involved in relief efforts associated with Hurricane Sandy. An

extension of time will allow the exempt organizations to focus their attention on helping the


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impacted individuals in their most immediate short term needs, as well as planning for the

more intermediate-term and long-term assistance that will be necessary.

The AICPA recommends that the IRS provide relief as soon as possible, preferably this

week, to help these organizations and tax preparers. Such relief would reduce the additional

stress some individuals may be facing from the impacts of both the approaching filingdeadlines as well as the impacts and disruption they may have (and continue to face) due to

Hurricane Sandy. Such relief could be provided in stages, with possibly an initially-

announced short extension for all exempt organization returns and tax payments otherwise

due by November 15, 2012, regardless of the geographical location of the organization or itspreparer, and then with a later-announced additional extension of time for those

organizations and preparers that are located within qualified disaster declaration areas.

Relief for Tax Returns and Payments of Other Taxpayers

While November 15th is not as significant a deadline for tax returns of taxpayers other than

exempt organizations, it can also still be applicable to various fiscal year-end taxpayers. For

example:

C corporations or S corporations with either a February 29, 2012 fiscal year end (thathave been properly extended) or an August 31, 2012 fiscal year end;

partnerships, trusts and estates (e.g., Form 1041, U.S. Income Tax Return for Estatesand Trusts) with a February 29, 2012 fiscal year end (that have been properlyextended) or a July 31, 2012 fiscal year end;

employee benefit plans with a January 31, 2012 plan year for filing Form 5500,Annual Return / Report of Employee Benefit Plan;

estates filing Form 706, United States Estate (and Generation-Skipping Transfer)Tax Return, for decedents dying on or after January 29, 2012, and for decedentsdying on or after July 29, 2011 that have been extended (for estates, the Form 706 is

due nine months after the date of the decedents death; thus, estates with original due

and extended due dates starting October 29, 2012 should be given filing relief); and,

estates filing Form 1041.Certain short tax years for all types of returns may be affected as well. For some of these

returns, there may be potential tax accounting methods that the taxpayer desires to adopt orautomatically change to under the authority of various revenue procedures, or elections that

must be made in timely filed returns in order to be properly adopted, such as the portability

election for estates. Those elections are also at risk if further action is not taken by the IRS.

In addition, various quarterly estimated tax payments may be due on November 15th

for a

variety of types of taxpayers with various fiscal year ends.


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Relief for Information Returns and Payments

There are also information returns and payments due on November 15th

or November 30th

for other types of filers that should also be considered as part of broader relief. For

example, some payroll returns and deposits will also be due on or before November 15th

.

Certain excise tax returns may be due at the end of November as well.

Relief for Other Time-Sensitive Acts

Many other situations can also be time sensitive; a non-exhaustive list of examples include:

the filing of a private letter ruling request; the time to respond to an IRS information request upon examination or at appeals; the permissible period to request a change in tax accounting period; the permissible period to request certain changes in tax accounting method that

require prior approval from the IRS; and,

the time to request a Collection Due Process (CDP) administrative hearing or toappeal the determination to the U.S. Tax Court or a U.S. district court.

We recommend that the IRS carefully consider the full list of time-sensitive acts as

described in Revenue Procedure 2007-56 to ensure that any additional relief provided is as

comprehensive as possible.

* * * * *

The above illustrative situations are not a comprehensive list of all impacted taxpayers or allimpacted information filings, tax return filings and payments expected to be due within the

coming month, but helps to demonstrate how many taxpayers can be impacted even in a

short period of time. Given that there are many filings due by November 15th

, especially by

exempt organizations, this time sensitive heightens the desperate need for a very quickresponse from the IRS for further relief due to Hurricane Sandy.

These recommendations were developed with the input of many of the AICPAs taxtechnical resource panels and committees, and approved by the AICPA Tax Executive

Committee.

The AICPA is the worlds largest member association representing the accounting

profession, with nearly 386,000 members in 128 countries and a 125-year heritage of

serving the public interest. Our members advise clients on federal, state and internationaltax matters and prepare income and other tax returns for millions of Americans. Our

members provide services to individuals, not-for-profit organizations, small and medium-

sized businesses, as well as Americas largest businesses.


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We appreciate your consideration of these recommendations. If you have any questions

regarding this submission, please feel free to contact me at (304) 522-2553, [email protected]; Edward S. Karl, AICPA Vice President Taxation, at (202) 434-

9228, or [email protected]; or Melissa Labant, AICPA Director of Tax Advocacy &

Professional Standards, at (202) 434-9234, or [email protected].

Respectfully submitted,

Jeffrey A. Porter, CPAChair, Tax Executive Committee

cc: Steven Miller, Internal Revenue Service, Deputy Commissioner Services &

Enforcement

Faris Fink, Internal Revenue Service, Commissioner, Small Business / Self-Employed DivisionRuth Perez, Internal Revenue Service, Deputy Commissioner, Small Business / Self-

Employed Division

Joseph Grant, Internal Revenue Service, Acting Commissioner, Tax Exempt &Government Entities Division

Lois Lerner, Internal Revenue Service, Director, Exempt OrganizationsCandice Cromling, Internal Revenue Service, Director, National Public Liaison

Documents

AICPA Hurricane Sandy Relief Comments to IRS