RALEIGH – North Carolina will grant tax relief to affected individuals and businesses in 15 mountain counties who are unable to file tax returns and make timely payments due to the destruction caused by Tropical Depression Frances.

The waiver from the N.C. Department of Revenue is similar to relief granted from the Internal Revenue Service and includes the waiver of both late filing and payment penalties for a tax return that is either due to be filed or paid between Sept. 7 and Nov. 9, provided the return is filed or the tax is paid before Nov. 10. The relief does not include the waiver of interest, which state law prohibits.

The 15 counties, which have been declared federal disaster areas, are: Avery, Buncombe, Burke, Caldwell, Haywood, Henderson, Jackson, Madison, McDowell, Mitchell, Polk, Rutherford, Transylvania, Watauga and Yancey. The same relief will also apply to any North Carolina counties added to the disaster area.

A taxpayer eligible for relief should complete Form NC-5500, Request to Waive or Reduce Penalties, write “Tropical Storm Frances” on the top right of Form NC-5500, and check the block for natural disaster. The form is available at all Department of Revenue offices and on the agency’s website at: http://www.dor.state.nc.us/downloads/penalty.html. Send completed Form NC-5500 with the late return or payment. If the late return is a full-page return, staple Form NC-5500 to the front of the return. If the return is a coupon-size form, send Form NC-5500 with the return but do not staple the two together.

The Department of Revenue will also suspend forced collection actions, including the issuance of garnishments, tax warrants and certificates of tax liabilities, for taxpayers who are unable to pay because of damage inflicted by Frances. The suspension of forced collection actions will remain in effect until Dec. 1, and may be continued in individual cases depending on a taxpayer’s circumstances.

Affected taxpayers in a federally declared disaster area may choose to claim a disaster-related casualty loss on either their 2003 or 2004 state income tax returns. If a taxpayer files on a fiscal year basis, the loss can be claimed on the return for the fiscal year in which the loss occurred or the previous fiscal year.

Taxpayers claiming the loss on an original or amended 2003 state income tax return should write “Tropical Storm Frances” in black ink at the top right of the form. Taxpayers who wait to claim the loss on their 2004 returns should also write “Tropical Storm Frances” in black ink at the top right of the form when it is filed. The loss must be deducted on the state income tax return in the same tax year it is deducted for federal income tax purposes.

Generally, taxpayers in a federally-declared disaster area who receive assistance payments from state programs, charitable organizations or employers to cover medical, transportation, temporary housing or other immediate subsistence needs do not have to include such payment in their income.

(For additional information, taxpayers may contact the Department of Revenue at 1-877-252-3052 or visit the Department’s website at www.dor.state.nc.us. For information on federal tax relief visit the Internal Revenue Service website, http://www.irs.gov/newsroom/index.html.)

Last modified on: 10/31/07 03:44:10 PM .