IR 2018-142, 6/26/2018
IRS has issued a reminder that Friday, June 29, 2018 is the deadline for filing a 2017 federal income tax return for residents of Puerto Rico, the U.S. Virgin Islands and American Samoa affected by recent hurricanes and tropical storms. That day is also the deadline for those taxpayers who are subject to the requirements of Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U. S. Possession, to file that form.
Background. Puerto Rico and the U.S. Virgin Islands were greatly affected by hurricanes in September, 2017. American Samoa was subject to a tropical storm in February 2018.
The Code provides that an individual who takes the position for U.S. income tax reporting purposes that the individual became, or ceases to be, a bona fide resident of a possession for any tax year, must file with IRS notice at a time and in a manner prescribed by IRS. (Code Sec. 937(c)(1))
This requirement to file the relevant form, Form 8898, applies to anyone who had total gross income exceeding $75,000 for the year, ceased to be (or became) a bona fide resident of a U.S. territory (also referred to as a U.S. possession) during the year, and met other requirements. For a married couple, the requirement to file Form 8898 with IRS applies to each spouse separately. Likewise, the $75,000 income threshold applies to each spouse separately. (Reg. § 1.937-1(h), Instructions to Form 8898 (Rev. Dec. 2016)) A $1,000 penalty may apply if a person who is required to file Form 8898 fails to file or files an incorrect or incomplete Form 8898. (Code Sec. 6688)
Bona fide resident status matters because special tax rules may apply to anyone who is a bona fide resident of a U.S. territory, compared to a resident of any of the 50 states or the District of Columbia.
June 29 deadline for 2017 income tax returns. IRS has now issued a reminder that any residents of Puerto Rico, the U.S. Virgin Islands, and American Samoa affected by the hurricanes and tropical storms, who are required to file a 2017 federal income tax return or pay their 2017 tax, must do so by June 29. This special extended deadline is available regardless of whether a taxpayer’s residence changed during 2017. No interest, late-filing penalty or late-payment penalty will be due.
IRS provided federal income tax return filing and penalty relief to anyone whose mailing address is in Puerto Rico, the U.S. Virgin Islands, or American Samoa. Eligible hurricane and tropical storm victims with a mailing address elsewhere, can also obtain this relief by calling the IRS disaster hotline at 866-562-5227.
June 29 deadline for Form 8898. Bona fide residents of Puerto Rico, the U.S. Virgin Islands, and American Samoa who permanently relocated to the U.S. mainland due to the hurricanes and tropical storms may need to file Form 8898 with IRS along with their Form 1040 or Form 1040NR. Due to the disaster-related extensions granted by IRS to residents of these three U.S. territories, Form 8898 will generally be due by Friday, June 29, 2018. In addition, anyone who files for an income-tax-filing extension will also have until Oct. 15, 2018, to file Form 8898.
Puerto Ricans and U.S. Virgin Islanders who temporarily left due to Hurricane Irma or Hurricane Maria but have already returned to the territory, or plan to do so, will generally not need to file Form 8898. That’s because under special relief, none of the time between Sept. 6, 2017, and May 31, 2018, counts as time away from the territory. See Notice 2018-19, 2018-12 IRB.
References: For postponement of tax deadlines due to disasters, see FTC 2d/FIN ¶ S-8500; United States Tax Reporter ¶ 75,08A4. For Form 8898, see FTC 2d/FIN ¶ O-1085.5; United States Tax Reporter ¶ 9374.01.