Extensions for Hurricane Idalia in Florida

The IRS issued Notice FL-2023-06 on August 30, 2023 regarding relief available to victims of Hurricane Idalia, which began August 27, 2023 in Florida. The relief includes extensions for taxpayers completing 1031 exchanges. See the IRS Notice at https://www.irs.gov/newsroom/irs-announces-tax-relief-for-those-impacted-by-idalia-in-florida. Taxpayers involved in a 1031 exchange may qualify for relief under either Section 6 or Section 17 of Revenue Procedure 2018-58, as described below.

Disaster Date: The “Disaster Date” is in bold.

Covered Disaster Area: The “Covered Disaster Area” includes Alachua, Baker, Bay, Bradford, Calhoun, Charlotte, Citrus, Clay, Collier, Columbia, DeSoto, Dixie, Duval, Flagler, Franklin, Gadsden, Gilchrist, Gulf, Hamilton, Hardee, Hernando, Hillsborough, Jefferson, Lafayette, Lake, Lee, Leon, Levy, Liberty, Madison, Manatee, Marion, Nassau, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, Sumter, Suwannee, Taylor, Union, Volusia and Wakulla counties.

Affected Taxpayers: An “Affected Taxpayer” includes individuals who live, and businesses whose principal place of business is located in the Covered Disaster Area. Affected Taxpayers are entitled to relief regardless of where the relinquished property or replacement property is located.

Option One (General Postponement under Section 6):

·       Qualification: Only Affected Taxpayers qualify under this option and may exercise this option regardless of whether the exchange began before or after the Disaster Date.

·       Extensions: Any 45-day or 180-day deadline that falls on or after the Disaster Date and before February 15, 2024, is extended to February 15, 2024. Deadlines that fall after February 15, 2024, are not impacted.

Option Two (Alternative Extension under Section 17):

·       Qualification: In order to qualify under this option, the taxpayer must (1) be an Affected Taxpayer, or (2) otherwise have difficulty meeting the 45 or 180-day deadlines under the conditions outlined in Rev. Proc. 2018-58, section 17.  This option is only available if the relinquished property was transferred (or the parked property was acquired by the EAT in a reverse exchange) on or before the Disaster Date.

·       Extensions: Any 45 or 180-day deadline that falls on or after the Disaster Date is extended to (1) February 15, 2024, or (2) 120 days from the original deadline, whichever is later. [Note, the date may not be extended beyond one year or the due date (including extensions) of the tax return for the year of the disposition of the relinquished property.] Additionally, any 45-day identification period that falls prior to the Disaster Date is also extended if an identified replacement property is substantially damaged by the disaster.

If you believe you may be entitled to extensions under one of the above options, we strongly recommend that you speak with your tax professional for further guidance. Also, be aware that other counties/parishes may be added to the Covered Disaster Area and/or the extension date may be extended from time to time, even though the IRS does not issue a new notice, so you should check the IRS website for updates periodically.