October 15, 2001 Tax Relief for Victims of September 11 Attack FEDERAL The Internal Revenue Service has issued initial administrative relief for taxpayers affected by the terrorist attacks on September 11. They consist of the following: 1) The President has declared the following areas to be disaster areas: Bronx, Brooklyn, Manhattan, Queens, and Staten Island in New York and Arlington County in Virginia. Disaster area relief is available not only to taxpayers in these counties affected by the disaster, but also to other affected taxpayers, regardless of where they reside. These "other taxpayers" include: a) victims of the four crashes and those on the ground b) all workers assisting in the relief activities of the covered disaster areas and in Pennsylvania, regardless of whether they are affiliated with a recognized government or philanthropic organization, and c) taxpayers whose place of employment is located within the Presidentially declared disaster area. 2) A taxpayer who suffers a disaster loss (i.e. damaged apartment, destroyed business inventory, additional clean-up cost) can take the deduction in the tax year in which the disaster occurs or can elect to deduct the loss in the immediately preceding tax year. Thus, taxpayers affected by the disaster area declaration may claim casualty losses on amended 2000 tax returns to generate some immediate tax relief from their losses. 3) Affected individual taxpayers who have an estimated tax payment due September 17, 2001 may postpone that payment by including the amount with their final estimated payments for tax year 2001, which are due January 15, 2002. 4) Affected corporate taxpayers that face an estimated tax payment after September 11, 2001, and before January 15, 2002 may postpone that payment until January 15, 2002. 5) Affected individuals that have extended the time for timely filing their tax year 2000 federal individual income tax return beyond September 10, 2001 will have until February 12, 2002 to file their returns. A similar postponement to pay the tax shown on the return is generally not permitted, however, the period from September 11, 2001 until January 9, 2002 will be disregarded in the calculation of any failure to pay penalty. Since the tax return due date is extended, it is likely that the date for contributions to pension plans and SEPs is extended as well. 6) Affected taxpayers other than individuals, including businesses whose principal place of business is located in the disaster area and businesses located outside of the disaster area, whose records are necessary to meet a filing or paying deadline and are maintained in the disaster area (i.e. a CPA in NYC has the records) are granted a 120 day postponement and a six month extension to file certain federal tax returns otherwise due on or after September 11, 2001 and on or before November 30, 2001 and to pay the tax shown or required to be shown on those returns. 7) Taxpayers who have difficulty in meeting their federal tax obligations because of disruption in the transportation and delivery of documents by mail or private delivery service resulting from the terrorist attack and do not otherwise qualify for relief will have until November 15, 2001 to file returns and make payments required to be made from September 11, 2001 through October 31, 2001. 8) The IRS cannot extend the deadline for employment or excise tax deposits, but it will waive penalties on deposits required to have been made between September 11, 2001 and October 31, 2001 if those deposits are made by November 15, 2001. Anyone entitled to the above relief should write in red ink at the top of their return "September 11, Terrorist Attack". NEW YORK The Commissioner of Taxation and Finance has postponed deadlines from September 1, 2001 through December 10, 2001 for: a) filing any returns b) paying any tax or installment of tax c) filing a petition for credit or refund or for determination of a deficiency or application for review of a decision d) allowing a credit on a refund e) assessing tax f) giving or making a notice or demand for payment of tax g) collecting tax by levy or otherwise h) bringing suit by New York State for any tax liability i) any other act required or permitted under the Tax Law or specified for the New York State Regulations. Taxpayers directly affected by these tragic events include: a) all workers assisting in the relief activities; b) any taxpayer whose records necessary to meet tax filing, paying or other deadlines are not available due to the attacks; c) taxpayers who have difficulty in meeting tax filing, payment or any other deadline because of disruptions in communications services (i.e. telephone, facsimile, or electronic mail resulting from terrorist attacks; d) taxpayers whose tax practioners were, due to the attack, unable to complete work to meet tax filing, payment and other deadlines on behalf of their clients. Businesses or individuals who are affected by the tragic events of September 11, 2001 should mark "WTC" on the top center of the front page of any late filed return, extension, declaration of estimated tax, estimated tax voucher or other document and should include a brief explanation of the circumstances that affected their ability to meet tax deadlines. If you have any questions about these or any other financial matters, please call us. Please note that this and other newsletters are available on our website at www.lisch.com.