IRS Announces Broad Filing and Payment Extensions to Hurricane Victims; Alabama DOR Offers “Case-by-Case” Relief
SALT Alert - Alabama Edition
On October 1, the Internal Revenue Service (IRS) issued a sweeping notice regarding Hurricane Helene relief. The disaster tax relief covers all individuals and businesses affected by Hurricane Helene, “including the entire states [emphasis added] of Alabama, Georgia, North Carolina and South Carolina and parts of Florida, Tennessee, and Virginia.” Taxpayers will have until May 1, 2025, to file various federal individual and business tax returns and make the related tax payments. For Alabama taxpayers, that means filing and payment relief for deadlines that fell on September 22 or thereafter.
The listed examples included: individual and business tax returns normally due in March or April 2025; individuals, businesses and tax-exempt organizations that had in place a valid extension to file their 2023 federal return; and 2024 estimated tax payments normally due January 15, 2025, and 2025 estimated tax payment payments normally due April 15, 2025. Relief was also granted with respect to certain payroll and excise tax returns and payments.
The IRS said it’s automatically granting this relief (i.e., no need to request it) to “any taxpayer with an IRS address of record located in the [designated] disaster areas.”
The Alabama Department of Revenue (ALDOR) promptly issued a responsive notice, which is narrower in scope and applies to multiple tax types (not just income taxes). Per the notice, taxpayer requests will be granted “on a case-by-case basis, to Alabama taxpayers who reside or have a business in federally declared disaster areas and who may be unable to timely file tax returns as a result of damage or disruptions caused by Hurricane Helene. Taxpayers may contact the following ALDOR offices by telephone to request relief or for any additional assistance….” The notice does not refer to an extension of time for payment of the related tax, only to the filing of designated returns.
Chief Judge Calls on Alabama Legislature to Fix the Rural Physician Tax Credit
In a rare moment, in an Opinion and Final Order, Alabama Tax Tribunal Chief Judge Jeff Patterson called on the Alabama Legislature to address the disconnect between the literal wording of the Rural Physician Tax Credit statute, Ala. Code § 40-18-130 et seq., and its likely intended purpose. He began his remarks by pointing out that the ALDOR agrees that the credit statute does not accomplish its intended purpose of incentivizing physicians to serve rural communities and hospitals since it requires the physician to both live in and serve a rural community that has a hospital with an emergency room. In this case, the taxpayer, a licensed physician, lives in Brent, Alabama (which has no hospital), but practices 2.1 miles away at Bibb Medical Center in neighboring Centreville. The physician appeared pro se and unsuccessfully urged the Tribunal to essentially merge the municipalities of Brent and Centreville into one functioning community for this purpose. The ALDOR almost reluctantly pointed out that the statute doesn’t allow that here, and the Judge agreed.
Judge Patterson concluded: “There is a great need to resolve this discordance through legislation applicable to all open tax years that amends the statute.” He pointed out that a bill was introduced last session, H.B. 291, to do just that, but it died in committee. Indeed, bills designed to correct the problem have been introduced for the past several years, but to no avail. We hope Judge Patterson’s call will be heeded by the Legislature next spring.
Alabama Tax Tribunal Celebrates Its 10th Anniversary
Attendees of the annual meeting of the Alabama State Bar Tax Section, recently held in Montgomery, celebrated the 10th anniversary of the landmark legislation that created the Alabama Tax Tribunal and commended the four judges who have served on the tribunal to date.
The Tribunal was created by the Alabama Taxpayer Fairness Act, Act 2014-146, and began operating on October 1, 2014. The Tribunal is an independent, executive-branch agency that is designed to provide taxpayers with an efficient, impartial, and informal method of appealing from most final assessments entered and refunds denied by the ALDOR and self-administered counties and municipalities that have not opted out of the tribunal’s jurisdiction.
Those pictured below are Tax Tribunal Chief Judge Jeff Patterson, Associate Tribunal Judge Leslie Pitman, Hank Hutchinson of Capell Howard PC, Former State Representative and long-time Birmingham Attorney Paul DeMarco, Retired Chief Judge Bill Thompson, Associate Justice of the Alabama Supreme Court Will Sellers, Alabama Court of Civil Appeals Judge (and former Tribunal Associate Judge) Christy Edwards, and Bruce Ely and Jimmy Long of our firm. Sellers, Hutchinson, Ely and Long are longstanding Tax Section members and were the principal authors and advocates of the decade-long effort to create an independent tax tribunal for our state. Former Representative DeMarco was a key sponsor of the bill for several years.
