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Can Victims of Hurricane Katrina Claim their Disaster Tax Benefits from the IRS?

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Southfield, MI (PRWEB) September 13, 2005

The Casualty Loss deduction (Schedule A, Form 1040) of the Internal Revenue Code could be used to put huge amounts into the pockets of qualified taxpayers very quickly. Yet few people consider looking toward the IRS for rapid and significant financial support for the victims of hurricane Katrina.

According to the Internal Revenue Code, qualified taxpayers can

•     Claim their current Katrina disaster losses in 2004 by filing an amended return.

•     Based on these calculations, claim a refund of taxes paid in 2004, 2003 and 2002.

Generally, the claim and refund process requires a great amount of paperwork, expert valuations to calculate losses and the time required for processing by the IRS. For most situations the process works.

While examining the assistance provided by FEMA and other governmental agencies to victims of hurricane Katrina, there has been no mention of what the Internal Revenue Service could and should provide.

Primarily, it is essential that the whole claim process be streamlined for the victims of hurricane Katrina in order to generate a substantial amount of cash for qualified taxpayers.

How could this be accomplished?

1. AMEND THE CLAIMS SUBMISSION PROCESS – Dispense with a whole lot of paperwork and take the victims’ current situation into consideration. Do not cause additional, unnecessary burden by asking the victims to remember and prove in minute detail all the different aspects of their loss.

There are three major components in the claim submission process:

a. Proof of ownership;

b. Amount of the loss (based on valuation immediately before and after the disaster). The IRS also requires that all the properties claimed be listed by category and by owner, even though all these numbers are eventually added up on Form 4684 for a single loss amount for a family.)

c. Reimbursements from insurance or other sources.

How can the claim submission process be streamlined for Katrina victims?

If the victims do not have all the required information in the required format, the IRS should accept:

•     For real-estate (homes, boats, etc.), accept alternative property ownership and pre-disaster valuation data such as local tax assessment and/or valuation from an acceptable online real-estate valuation site, or statements from local professionals familiar with the property.

•     For other personal properties (e.g. clothes, furnishings, etc.), follow the example of insurance companies and either accept (for pre-disaster valuation) the insured value of these properties (for renters) or a specific percentage of the real-estate value of the home.

•     For post-disaster valuation of these properties, accept a 0 valuation (or some minimal land valuation) for all the real-estate properties that are completely demolished, flooded, etc. In many cases, homes that appear to be in pretty good shape have serious structural damage and will, eventually, be condemned. If insurance adjusters or independent adjusters can be made available, they should have priority for accessing areas with partial destruction and assess damages and valuation. This process should NOT hold up an IRS claim.

•     For insurance and other reimbursements accept an estimate.


Rather than follow the standard procedure of sending claims in to the IRS for processing and eventual issuing of tax refunds, the IRS should set up local offices with the appropriate staffing for

•     Onsite processing and approval of claims

•     Onsite, immediate issuing of refund checks.

The IRS has established a toll free telephone number, has some IRS staff at some FEMA offices, and is relying on volunteers from the American Institute of Certified Public Accountants to provide assistance to the disaster victims. This is not enough.

Our representatives should mandate the IRS to provide easy and rapid refunds to the qualified victims.

Dr. Anne-Marie Pollowy Toliver is the author of HOME OWNER’S GUIDE TO DISASTER TAX RELIEF

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