IRS and DOL Issue Deadline Relief for California Wildfire Victims
The IRS and the Department of Labor (DOL) have each issued their own pieces of guidance providing relief to those affected by the 2018 California wildfires.
The IRS issued News Release CA-2018-13, announcing tax-related deadline relief for certain areas in the State of California suffering damage from the recent wildfires. The relief, based on Treasury Regulation 301.7508A-1(c)(1)), applies to various tax-related acts whose deadlines can be extended due to a disaster declaration. These include completion of rollovers or recharacterizations, correction of certain excess contributions, making plan loan payments, filing Form 5500, and certain other acts under the above-described regulation.
The IRS-announced deadline relief currently applies to Butte, Los Angeles, and Ventura counties. For those covered by this guidance, covered tax-related deadlines falling on or after November 8, 2018, and before April 30, 2019, are extended to April 30, 2019.
The automatic relief applies to residents of the identified areas, to those whose businesses or records necessary to meet a covered deadline are located there, and to certain relief workers providing assistance following the disaster events. Any individual visiting a covered disaster area that is injured or killed as a result of the events is also entitled to deadline relief. Affected taxpayers who reside or have a business located outside the covered disaster areas are required to call the IRS disaster hotline at 866-562-5227 to request relief.
The DOL’s Employee Benefits Security Administration (EBSA) released a fact sheet containing guidance and relief as it pertains to the 2018 California wildfires. This followed their release of an FAQ a couple days earlier.
The fact sheet focuses on verification procedures for plan loans and distributions, the deposit timing of participant contributions and loan repayments, blackout notices, ERISA claims compliance, and Form 5500, Annual Return/Report of Employee Benefit Plan, filing relief in light of the recent wildfires.
The fact sheet provides the following guidance for employers who were located in a county or tribal area identified now or in the future for individual assistance by the Federal Emergency Management Agency (FEMA) because of the 2018 California Wildfires.
The EBSA will not treat a distribution or loan provided because of the wildfires as a failure if procedural requirements for plan loans or distributions are not followed due to the wildfires (provided the wildfires are the cause, and the plan administrator makes a good-faith effort to comply with the requirements and makes an attempt to gather any missing documentation as soon as practicable).
It will not take enforcement action with respect to a temporary delay in forwarding participant contributions and loan repayments to a plan (employers and service providers must act reasonably to comply with existing rules as soon as practicable).
It will not require a fiduciary determination regarding blackout notice timing, as natural disasters are “beyond the reasonable control of the plan administrator” (an exception to the blackout notice timing).
It will not take enforcement action with respect to ERISA claims processing that is delayed (provided employers act reasonably, prudently, and in the best interest of participants and beneficiaries).
Form 5500 filing relief is detailed in the IRS news releases listed on the IRS disaster relief website. Affected employers, advisors, and employees are encouraged to visit the EBSA’s disaster relief website, or to contact the DOL or IRS directly.
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