Disaster Tax Workshop
On September 12, First District Supervisor Das Williams hosted a disaster tax workshop with top Internal Revenue Service (IRS) and Franchise Tax Board (FTB) disaster specialists, in collaboration with the offices of Congressman Salud Carbajal, Senator Hannah-Beth Jackson, Assemblymember Monique Limon and Montecito Union School. The room was full with approximately 60 attendees who came from as far as San Diego and San Francisco, with most being affected property owners from Montecito or accountants who represent them. Almost 100 more people viewed the workshop live online.
The purpose of the workshop was to provide clarity on the special set of tax provisions for declaring casualty losses relating to the Thomas Fire and 1/9 Debris Flow, as property owners and tax professionals alike have had many questions about how to properly file for the disaster that spanned two calendar years and included two separate disaster events. It is important to note that federally and according to the IRS, the Thomas Fire and 1/9 Debris Flow is known as and part of DR-4353 (Jan 1, 2017 – Jan 18, 2018). Conversely, the FTB recognizes the fire and Debris Flow as separate emergency events.
We were very fortunate to be joined by presenters Joseph McCarthy, IRS Stakeholder Liaison Tax Specialist, and Marc Narlesky, FTB Taxpayers’ Rights Advocate Office Specialist.
The presentation was geared toward taxpayers and tax professionals, and included Federal and State information which is at best complex and confusing, especially since a change in disaster relief tax law means that casualty loss is calculated differently for DR-4353 and DR-4407 although the disasters both took place in 2018.
We learned several key lessons that can benefit our community. Here are the top two lessons learned for taxpayers and tax professionals alike. Additional answers to important questions in our area will be published in a future edition of the Montecito Journal.
Q: Which year should the casualty loss be declared, what if loss was sustained in both December 2017 and January 2018?
A: For the IRS, both Thomas Fire and 1/9 Debris Flow can be declared on 2018 taxes, since this timing is based on when the disaster happened and/or when the estimate of loss is known. Note the calculation of loss includes the estimate of insurance payments so it is most likely losses from the Thomas Fire in December wouldn’t be calculated until 2018.
What is the deadline to file?
Both IRS and FTB extension deadlines apply for losses caused by the Thomas Fire, 1/9 Debris Flow, as well as Woolsey, Hill and Camp Fires. The extension deadline for all of these disasters is October 15, 2019. For information about declaring casualty loss in prior years, call the IRS disaster hotline to be referred to the correct publications or webinars that can help you.
For further information about the workshop and related follow up, or to send questions that may be able to be answered in a future MJ edition, contact Supervisor Williams’ First District disaster recovery specialist Lisa Valencia Sherratt at firstname.lastname@example.org or (805) 568-2155. To talk with Congressman Carbajal’s staff representative who serves as his IRS liaison, contact Sasha Davidson at email@example.com or (805) 730-1710.
Other important phone numbers: IRS Disaster Helpline 866-562-5227 and FTB Hotline 800-852-5711.