For Immediate Release
September 28, 2005
For Information Contact: Renee Mulvey, Iowa Department of Revenue spokeswoman, 515-242-6226
UPDATE: IOWA TAX RELIEF FOR TAXPAYERS IMPACTED BY HURRICANES KATRINA AND RITA
Taxpayers directly affected by Hurricane Katrina and Hurricane Rita will receive extended due dates and pay no penalty on late-filed taxes. This includes individuals and businesses qualifying for federal tax relief who are located in Louisiana parishes and Mississippi, Alabama and Florida counties impacted by Hurricane Katrina, and individuals and businesses qualifying for federal tax relief who are located in Louisiana parishes and Texas counties impacted by Hurricane Rita. Individuals and businesses that maintain accounting services in the disaster areas and relief workers are also entitled to special tax relief. The list of all affected areas and taxpayers is available on the Internal Revenue Web site at www.irs.gov/newsroom.
The Louisiana, Mississippi and Alabama taxpayers impacted by Hurricane Katrina have until February 28, 2006, to file Iowa sales, withholding and income tax returns and submit tax payments for any returns or deposits that were due on or after August 29, 2005. For Florida taxpayers impacted by Hurricane Katrina, the effective date is August 24, 2005.
The Louisiana and Texas taxpayers impacted by Hurricane Rita have until February 28, 2006, to file Iowa sales, withholding and income tax returns and submit tax payments for any returns or deposits that were due on or after September 23, 2005.
Any late-filing or late-payment penalties will be waived by the Iowa Department of Revenue. When affected taxpayers file their returns, they should include a written request for waiver of the penalty. If they receive an assessment for penalty, a written request for waiver of the penalty should be sent to the department and it will be granted.
This also applies to payments of estimated Iowa income tax for individuals and corporations. The department will waive underpayment of estimated tax penalties with respect to installments paid by the extended due date.
The following provisions of the Katrina Emergency Tax Relief Act of 2005 passed by Congress on September 21 apply to Katrina relief only at this time.
The standard mileage rate for charitable use of vehicles is raised to 34 cents, effective August 29, 2005, through December 31, 2006. This rate may increase for 2006.
Individuals living in the disaster area as of August 28, 2005, may claim their earned income credit and refundable child care credit based on their 2004 income for the 2005 tax year only. This could impact evacuees who are now living in Iowa.
Any qualified charitable contributions claimed made from August 28 through December 31, 2005, relating to Katrina relief are not subject to the 10% limitation for corporations. Any cash contributions to charities are not subject to the 50% income limitation and the phase-out of itemized deductions if the contributions are made before January 1, 2006.
The Iowa Legislature must adopt these provisions during its 2006 session before they are allowed for Iowa income tax purposes.
Updates to Iowa tax relief will be posted on the department’s Web site at www.state.ia.us/tax.
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