Why I love reading the IRS press releases…

I received this notice in my inbox this afternoon;

Notice 2011-32 designates the Japan earthquake and tsunami occurring in March 2011 as a qualified disaster for purposes of § 139 of the Internal Revenue Code.

But don’t go Googling Notice 2011-32 just yet, as it will be published in Internal Revenue Bulletin 2011-18, dated May 2 , 2011.

hen right after this email blast, I received this email;

IRS Announces Qualified Disaster Treatment for Japan

Washington — The Internal Revenue Service today issued guidance that designates the earthquake and tsunami in Japan in March 2011 as a qualified disaster for federal tax purposes. This guidance affects recipients of disaster relief payments as well as employer-sponsored private foundations.

The guidance allows recipients of qualified disaster relief payments to exclude those payments from income on their tax returns. Also, the guidance allows employer-sponsored private foundations to assist employee victims in areas affected by the March 2011 earthquake and tsunami in Japan without affecting their tax-exempt status.

Charities usually fall into one of two categories – public charities or private foundations. Under the tax law, a private foundation that is employer-sponsored may make qualified disaster relief payments to employees affected by a qualified disaster. These payments generally include amounts to cover necessary personal, family, living or funeral expenses that were not covered by insurance. They also include expenses to repair or rehabilitate personal residences or repair or replace the contents to the extent that they were not covered by insurance. Again, these payments would not be included in the individual recipient’s gross income.

Qualified disasters include Presidentially declared disasters, as well as other catastrophic events. Because of its catastrophic nature, the IRS has determined that the earthquake and tsunami in Japan that occurred last month is a qualified disaster for purposes of the federal tax law.

The IRS has made similar determinations regarding prior international disasters, such as the Haitian earthquake in 2010 and the Indian Ocean tsunami in 2004.

The IRS will presume that qualified disaster relief payments made by an employer-sponsored private foundation to employees and their family members in areas affected by the earthquake and tsunami in Japan are consistent with the foundation’s charitable purposes.

Today’s guidance does not affect individuals interested in contributing to victims of the Japan earthquake and tsunami. The IRS reminds taxpayers that there are some simple steps they can take to ensure that their contributions go to charities eligible to receive tax-deductible contributions.

The IRS has posted more information on IRS.gov.

So there.

This earthquake is now officially a “qualified disaster” because the IRS said so!

Hey, it’s them or the President making the call on disasters.

Remind me again why we don’t have that same cool option here in Canada?!?


Author: Warren Orlans

Welcome to inTAXicating. My name is Warren Orlans and this is my blog. With over 17-years experience in the taxation industry, 11 of them working for the Canada Revenue Agency (CRA), and the rest working in the private sector at large financial institutions responsible for resolving tax issues for corporations and individuals and the Canadian lead for a large US bank on FATCA implementation. My tax career began pretty much out of university at the CRA, in Collections, where I moved up, across, over and up again through their division with stops in Enforcement, Taxpayer Relief (then Fairness), Audit, Directors Liability, Training, Mentoring, GST, GST/HST, Payroll, Corporate Tax, Personal tax, and probably much more. If you have a collections, compliance or audit issue with the CRA, inTAXicating is the place you need to contact. inTAXicating works in strategic partnership with amazing tax lawyers, insolvency practitioners, mortgage brokers, debt counselling experts and much more. When dealing with governments, knowledge is power. We possess strong understanding of government so we know what the next step is before the government does. When you have a collections problem with the CRA, do you hire a graphic artist? No, you get a former collector who trained the staff, and who worked as a resource officer for 5 years. Then you know you are on the right track to resolving your tax problem(s). Others offer suggestions. We offer solutions! info@intaxicating.ca

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