The US Internal Revenue Service (IRS) recently issued a notice providing tax relief for individuals and businesses affected by the Hamas attacks in Israel beginning on October 7, 2023, effective for residents of, and businesses located in, Israel, the West Bank, and Gaza.
This relief offers an extended timeframe for fulfilling certain tax filing and payment obligations until September 30, 2025.
The relief specifically covers various types of tax obligations, including income tax, estate tax, gift tax, employment tax, and certain other federal tax obligations.
Who qualifies for the relief?
Taxpayers eligible for these extensions include:
- Individuals residing primarily in Israel, Gaza, or the West Bank.
- Individuals visiting these areas who were killed, injured, or taken hostage as a result of the attacks. -
- Businesses or sole proprietorships with a principal place of business in those areas.
- Individuals affiliated with government-affiliated or philanthropic organizations assisting affected areas.
- Individuals, businesses, sole proprietors, estates, or trusts, whose tax preparers or tax records are located in these areas.
- Spouses filing jointly with any of the eligible individuals described above.
What is the relief?
The relief allows qualified taxpayers to defer, until September 20, 2025:
- Filing returns for income, estate, gift, employment, excise (other than firearms), and certain other taxes. -
- Paying income, estate, gift, employment, excise (other than firearms), and certain other taxes.
- Filing lawsuits for taxes assessed by the IRS or for refunds of taxes paid to the IRS.
Exceptions and additional considerations
It’s important to note that this relief applies only to taxpayers impacted by the attacks attributed to Hamas on October 7, 2023. Individuals affected by other regional hostilities, such as Hezbollah attacks in northern Israel, the Houthis attacks in central Israel, or other attacks arising in Yemen, Syria, Iraq, and Iran after October 7, 2023, are not covered under this IRS relief.
However, taxpayers impacted by these other attacks could argue to the IRS that they stem from the Hamas attacks on October 7, 2023 and they are therefore entitled to similar relief. We recommend consulting with a tax professional before making such claims.
Implications for US and non-US citizens
This relief is not limited to US citizens or green card holders. Any qualifying person or entity with a tax obligation to the IRS and a residence or business in the designated regions may benefit from this measure, regardless of their citizenship status or any tax treaties between the US and Israel.
This IRS relief demonstrates support for those affected by the violence in Israel, providing flexibility in tax compliance for affected individuals and entities until they are better positioned to fulfill their tax filing and payment obligations.
Brian C. Bernhardt and Sarah B. Biser of the Fox Rothschild law firm in the United States represent Israeli companies and individuals.
Published by Globes, Israel business news - en.globes.co.il - on November 13, 2024.
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