Tax Lawyer Blog

A Blog written by the Tax Attorneys for Individuals and Businesses

San Bruno Fire Victims, Disaster Tax Losses

Victims of disaster are often faced with immediate and severe economic hardships.  Fortunately, the California Franchise Tax Board (FTB) and the State Legislature has provided a way for victims of the San Bruno Fire disaster to obtain the financial relief to which they are entitled in an expeditious manner.  This benefit to disaster victims comes through the process of claiming losses on income tax returns.  Any taxpayer claiming a loss (from a disaster or otherwise) is able to offset their income and thereby have a decreased tax liability—potentially entitling them to decrease in their tax liability or to increase their tax refund. 

Usually, casualty losses may only be claimed for the year in which they occurred which causes the benefit for claiming the loss to be significantly delayed.  However, victims of disaster have been afforded a special exception to the general loss rules: they may claim disaster losses in the year they occur or in the previous year.  Allowing disaster losses to be claimed for the previous year allows a potential tax refund to be sent sooner, putting cash into the hands of disaster victims when they need it most.  Of course, the FTB provides these special rules only for disasters that are designated as state disasters by the California State Legislature.

San Bruno Explosion 2010

The San Bruno Explosion disaster occurred in September of this year when a natural gas line exploded in a residential neighborhood.  Fire destroyed at least 53 homes, damaged more than 120 more, injured dozens of people and killed at least seven.  On October 8th, the State Senate and Assembly passed a bill in an extra session to provide disaster relief and further designate the explosion as an official disaster.  The bill can be read in its entirety here: ABX6 11.

Disaster Losses for Victims of the San Bruno Explosion 2010

Thanks to ABX6 11, victims of the San Bruno Explosion can claim their losses for the taxable year 2009, even though it occurred this year.  Most individual taxpayers have filed their 2009 taxes, but they can file an amended tax return (Form 540X) to reduce their prior year’s tax liability and the FTB can issue a speedy refund.  Those wishing to claim a disaster loss must follow the rules and guidelines set forth by the FTB, including offsetting their losses by any reimbursement or payment by insurance.  More information about claiming disaster loss can be found in a special FTB publication, “Disaster Loss: How to Claim a State Tax Deduction,” or by contacting our tax law office.    Hiring us or another tax professional to amend and/or file your 2009 taxes may further assist disaster victims. 

Further, there are many qualifying events for victims of disaster.    If you have questions on your qualifications, please contact our tax law office. We represent many individuals and businesses from many industries, including but not limited to, real estate management, construction, professional service firms, medical practices, manufacturing, retail, technology development, etc.   We provide comprehensive tax litigation, planning, and defense representation.   We invite you to contact our tax law firm to discuss your legal questions.   Please feel free to use our contact form or phone us at (415) 394-7200.

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