Beyond the Bottom Line - Alabama Tornado Recovery & Rebuild Edition
Alabama Department of Revenue Filing Extensions
The Alabama Department of Revenue (ADOR) issued an order granting automatic Alabama filing extensions to storm victims (individuals and businesses) located in disaster area Alabama counties.
The extension allows affected taxpayers to have until June 30, 2011 to file any Alabama tax return and state-administered local tax return that would have been due on or after April 15, 2011, and on or before June 30, 2011, without being subject to penalties and discount loss.
Motor Vehicle Registration Deadline Extended
The Alabama Department of Revenue is extending the April and May 2011 motor vehicle registration renewal deadlines through June 30, 2011, for vehicle owners residing in the disaster-area counties.
Affected taxpayers who have an annual April or May vehicle registration renewal during this extended period will not be subject to delinquent penalty and interest charges for late vehicle registration or late payment of vehicle property tax.
For more information on ALDOR extensions…
The IRS automatically identifies taxpayers who live or have a business in the covered disaster area and applies automatic filing and payment relief as follows:
- Postponed until June 30, 2011
- File tax returns, pay taxes, and perform other acts otherwise due on or after April 14 and on or before June 30
- Includes the April 18 deadline for filing 2010 individual income tax returns
- Income tax payments
- 2010 contributions to an individual retirement account (IRA)
- Filing of Form 5500
- What is not postponed?
- Information returns in the Form W-2, 1098 or 1099 series
- Forms 1042-S or 8027
- Employment or excise tax deposits
For more information about the IRS extensions…
Insurance Claim Services through BDO Business Interruption Services
Barfield, Murphy, Shank & Smith would like to introduce you to a member of our BDO Alliance USA - BDO Business Interruption Services. BDO Business Interruption Services helps businesses accelerate the recovery process after natural disasters and deal with the complexity of business interruption insurance claims.
Answers they can provide to you and your business include:
- What immediate steps are necessary to preserve rights under insurance policies?
- What qualifies as property loss and what does not?
- Do policies insure lost business income if the business was not physically damaged?
- How long does coverage last for lost business income?
- How do you document extra expenses incurred as a result of catastrophe?
- How do you document lost business income if records are destroyed?
- Do policies indemnify the business for continuing payroll?
For those affected, if your insurance policy includes coverage for “claim preparation/accounting services,” your fees to BDO Business Interruption Services could be reimbursable.
Contact Keith Barfield at (205) 982-5511 for a consultation with BDO Business Interruption Services.
Applying for SBA Loans
The U.S. Small Business Administration (SBA) is providing the people of Alabama with federal disaster loans such as:
- Disaster loans up to $200,000 are available to homeowners or renters to repair or replace disaster damaged or destroyed real estate (up to $40,000 for personal property)
- Business and private non-profit organization loans up to $2 million to repair or replace disaster damaged or destroyed real estate, machinery and equipment, inventory, and other business assets
- Economic Injury Disaster Loan (EIDL)
- Working capital loans to assist small businesses and most private non-profit organizations of all sizes with their ordinary and necessary financial obligations
- Available regardless of whether the business suffered any physical property damage
Applicants must have a credit history acceptable to the SBA; show the ability to repay all loans; and collateral (real estate included) is required for loans over $14,000 and all EIDL loans over $5,000. Loan amounts and terms are set by the SBA.
The filing deadline for physical property damage is extended until July 11, 2011. The deadline for EIDL applications is January 30, 2012. Loan applications may be completed online by visiting SBA’s secure website.
Filing Casualty Losses on Tax Returns
Taxpayers who suffered a casualty loss have the option of claiming federal disaster-related casualty losses on their federal income tax returns for either 2010 or 2011. Taxpayers claiming on their 2010 returns should mark the top of their tax returns "Alabama/Severe Storms, Tornadoes, Straight-Line Winds, and Flooding" to expedite refunds.
Individuals claim casualty losses as an itemized deduction on Form 1040, Schedule A. Casualty losses are reported on Form 4684 (PDF), Casualties and Thefts. Section A is used for personal-use property, and Section B is used for business or income-producing property.
Alabama’s tax laws allow taxpayers who suffer uninsured casualty losses to claim their losses as an itemized deduction on their annual Alabama Individual Income Tax Returns; however, unlike federal law, the casualty loss may be claimed only in the year the loss occurred.
For state tax purposes, taxpayers would claim the uninsured/unreimbursed losses resulting from the April 2011 storms on their 2011 Alabama tax year return.
Contact BMSS with assistance in calculating the value of your casualty loss.
Disaster Recovery & Data Backup from Abacus IT Solutions
If your information is stored only within your office computers, you risk the chance of losing that valuable data. Your client data, sales reports, financial documents, and other files need to be securely backed up on a regular basis.
Abacus IT Solutions (sister company to BMSS) can provide you with an online solution which uses the latest technology to securely backup your network. If a server goes down, they can have the information back to you quickly so you can resume normal operations as soon as possible.
That's what Managed Services from Abacus IT Solutions is all about - reducing down time and managing your IT network to create efficiency in your organization. Abacus IT Solutions Managed Services can be customized for a fixed monthly fee that's easy to budget.
Contact Robert Atherton at (205) 587-5527 to discuss your disaster recovery & data backup options.
Reminder About Charitable Donations
If your goal is to claim a legitimate tax deduction on your Form 1040 Schedule A, then you must donate to a qualified organization (search here). You cannot deduct contributions made to individuals or non-qualified organizations.
To deduct a monetary contribution, you must maintain bank records, payroll deduction records, or written acknowledgment containing the name of the organization, the date, and amount of the contribution. For text message donations, a telephone bill must show the name of the organization, the date and the amount.
Donations of used non-cash property must be in good used condition and valued at the fair market value (FMV) of the property. For any new property donated, you may deduct the cost. Special rules apply to vehicles. For non-cash property contributions of $250 or more, you must have bank records, payroll deduction records or written acknowledgment showing the amount of the donation and a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. If your total deduction for all non-cash contributions for the year is over $500, you must complete IRS Form 8283, Noncash Charitable Contributions. If you donate an item or a group of similar items valued at more than $5,000, you must also complete Section B of Form 8283, which generally requires a qualified appraisal.
If your business donates inventory, the amount of your deductible contribution is the FMV, minus any gain you would have realized if you had sold the item at its FMV on the date of the gift.
Doing Business After the Tornados
The devastation of the recent storms will provide rebuilding opportunities across Alabama. Make sure you have the necessary requirements and licenses before pursuing new projects. You may need additional business licenses to perform work in new geographic locations.
- Alabama General Contractors Board: Call 1-800-356-6361 and ask for Joe Rogers for information on obtaining a temporary license for tornado cleanup.
- Alabama Home Builders Licensure Board: Requires a license to perform construction on a residence when the cost exceeds $10,000.
- Alabama Electrical Contractors Board and Journeyman
- Alabama Board for Heating, Air and Refrigeration Contractors
- Alabama Plumbers and Gas Fitters Examining Board
- American Institute of Architects (AIA) Birmingham Chapter - Disaster Assistance Teams
Your business may also be interested in donating needed inventory or goods through the Alabama Governor’s Office of Faith-Based and Community Initiatives.
Contractors interested in performing debris removal, distribution of supplies, reconstruction and other relief activities should register and complete a FEMA Vendor Profile in the Central Contractor Registration (CCR), the official, FREE registrant database for the U.S. Federal Government. Upon completing your CCR registration and FEMA Vendor Profile, you can search for federal procurement opportunities. Contact FEMA Liaison Program at FEMA-Industry@dhs.gov or 202-646-1895.
To register your company and capabilities with local governments for only debris removal...
Other Resources and Assistance
In partnership with the City of Birmingham, Main Street Birmingham, Inc is assessing the effects of the recent tornado on small businesses in the Birmingham area.
The Birmingham Business Alliance is hosting "After the Storm: The Business of Re-Building Birmingham" on June 27. Attendees will hear presentations including "Turbocharged: Turning Crisis Into Opportunity” and “Just In Case: Update Your Crisis and Disaster Plan" from leading private, state and federal corporations and agencies that want to help small businesses.
The IRS also provides disaster loss tool kits for businesses and individuals.
UAB Tornado Relief Forgivable Loan Program will offer interest-free loans, typically of $1,000 or less, to people affected by the storms. The program is to be administered by the UAB School of Business and the UAB Educational Foundation.
BMSS is here for you. We will continue to keep you updated as new developments arise. Please call us at (205) 982-5500, email us, or contact your BMSS CPA if we can assist you with any of these or other matters.
IRS Circular 230 Notice: Federal regulations apply to written communications (including emails) regarding federal tax matters between our firm and our clients. Pursuant to these federal regulations, we inform you that any U.S. federal tax advice in this communication (including any attachments) is not intended or written to be used, and cannot be used, by the addressee or any other person or entity for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code.
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