News & Insights

Tax relief approved for San Diego flood victims

Due to rampant rains that recently triggered floods and landslides — and millions of dollars in property damage — on Feb. 27, the Internal Revenue Service (IRS) granted disaster relief to storm victims throughout San Diego County, resulting in extended due dates for both tax returns as well as extensions for Section 1031 exchanges.

As a result, taxpayers living in designated disaster areas throughout San Diego County can file returns with a balance due, with plans to make a final payment by the postponed due date of June 17, 2024. The California Franchise Tax Board followed the IRS’s lead on Feb. 27, 2024.

California disaster relief explained

To help clarify the process and ongoing updates, the following is a recap of the IRS’s recent disaster relief for Californians, which applies to individuals, business entities, quarterly payroll and excise taxes as well as passthrough entity elective tax:

• Individual tax returns and payments due on April 15, 2024.
• Estimated tax payments due April 15, 2024.
• Eligible taxpayers will also have until June 17, 2024, to make 2023 contributions to their IRAs and health savings accounts.
• Tax returns due on March 15, 2024, or April 15, 2024.
• The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area so taxpayers do not need to contact the agency to get this relief.
• In addition, under Revenue Procedure 2018-58, the four-day and 180-day time periods under Section 1031 has been extended if the relinquished property (or replacement property in a reverse exchange) is sold on or before January 21, 2024. The 45-day identification period and 180-day exchange period will be extended up to 120 days or until June 17, 2024 — whichever is later.
• Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2024 return normally filed next year), or the return for the prior year (2023, normally filed this tax season). The taxpayer must write the FEMA declaration number — 4758-DR – on any return claiming a loss.

Property Tax Reprieve

Further alleviating financial pressures as the result of flood damage, the San Diego County Board of Supervisors recently passed a law that delays and reduces property tax bills for property owners who suffered more than $10,000 in damages during the recent flooding. Both residential and commercial property owners must apply for the delay with the San Diego County Assessor’s office by April 10. Commercial property owners can apply if up to 20% of the value of a property was lost. The deferral is designed to provide victims with time and resources to focus on paying for repairs. For more information, flood victims should visit sdarcc.gov.

Conclusion

It is not uncommon for the IRS — and/or local entities — to grant disaster relief to help communities recover in the aftermath of extreme weather or natural disasters. Other situations that have resulted in tax relief for victims include the California wildfires, multiple hurricanes and the Alaska storms. This latest disaster relief is very similar to what the IRS implemented last year as a result of severe storm damage in California.

Phil Jelsma is a partner and chair of the tax practice team at Crosbie Gliner Schiffman Southard & Swanson LLP (CGS3). The article by Phil Jelsma can also be read in The Daily Journal and The Daily Transcript (subscriber only).