[StBernard] IRS: Act now to preserve Katrina-related tax breaks

[Westley Annis]

IRS: Act now to preserve Katrina-related tax breaks

ATLANTA - The regional office of the International Revenue Service is
advising taxpayers along the Gulf Coast and elsewhere not to miss
opportunities for tax relief that have arisen from the fall hurricanes. 
For instance, persons who provided assistance to Hurricane Katrina victims -
or who plan to provide assistance before the year ends -- may be eligible
for some federal tax breaks. 
The Katrina Emergency Tax Relief Act of 2005 provides special tax benefits
not only for those directly affected by the storm, but also for those who
provide assistance to victims. While most provisions of the Act continue
into 2006, some important tax benefits expire in 2005 and require action no
later than the end of this year. 

One such provision favorrs both individuals and corporations who make cash
contributions to qualified charities. For them, the law lifts percentage
restrictions and, for individuals, deduction phase-outs, for cash
contributions to qualified charitable organizations made between Aug. 28 and
Dec. 31, 2005. This can mean a much larger allowable tax deduction for cash
contributions made during this time period. 

"Typically, under law, individuals are allowed to make donations not
exceeding 50 percent of their adjusted gross income," said IRS spokesman
Eric Erickson. "The Katrina law removes this requirement through Dec. 31 and
allows donations of up to 100 percent." 

For corporate and other business taxpayers, here are other soon-to-expire
provisions: 

. A larger-than-normal deduction is allowable for food inventory contributed
to a qualified charitable organization between Aug. 28 and Dec. 31, 2005. 

. A larger-than-normal deduction is allowable for charitable contributions
of books from inventory contributed to an elementary or secondary public
school between Aug. 28 and Dec. 31, 2005. 

. For employers who hire a displaced worker, whether or not the place of
employment is located in the Hurricane Katrina "core disaster area," the 40
percent-of-wages-paid Work Opportunity Tax Credit is available. The worker
must be one who, on Aug. 28, lived in and was displaced from the Hurricane
Katrina core disaster area, and who is hired between Aug. 28 and Dec. 31,
2005. 

. For employers located in the core disaster area whose business was
inoperable on any day after Aug. 28, 2005, and before Jan. 1, 2006, and who
retain and pay wages to eligible employees sometime during that time period,
a new Employee Retention Credit of 40 percent of up to $6,000 of qualified
wages paid is available. 

More information on these expiring provisions, as well as all other
provisions of the Act can be found in the U.S. Joint Committee on Taxation's
explanation at www.house.gov/jct/x-69-05.pdf 

Information may also be found on the IRS Web site: www.irs.gov ; click on
"Help for Hurricane Victims." 

Additionally, the IRS has established a special, toll-free telephone number
for people affected by Katrina who need help with tax matters:
1-866-562-5227. 

By Kathy Finn 
The Biz Network 
kfinn at mcmediallc.com