As Americans worry whether the country will default on its debt amid warnings from the Treasury Department about the dire consequences, something unexpected is exacerbating the country’s debt problems: Mother Nature.
Lawmakers are contemplating ways of resolving the current crisis as they try to reach agreement on how to raise the debt ceiling to pay the nation’s bills and avoid a default by June 1. Even if Republicans and Democrats agree on spending cuts as part of a deal, the Treasury Department needs to find a way to bring in more money than the government is spending to prevent the nation’s debt problem from worsening. Meanwhile, as lawmakers point fingers at each other and continue to argue over solutions, severe weather in several states is wreaking havoc on the nation’s finances.
The IRS delayed tax filings for people in dozens of counties across the country after federal disaster declarations were issued following severe storms, mudslides, tornadoes and other weather emergencies. Although the delays are expected to help people suffering from the disasters, they have cut the amount of tax dollars received by the Treasury Department, which will further worsen the debt crisis. Last year, the national debt surpassed $31 trillion for the first time, according to the Treasury, after record-high federal borrowing during the pandemic.
Some California residents were the recipients of tax relief in January, when at least a dozen atmospheric rivers dumped enormous amounts of water on the Golden State, leading to excessive flooding and mudslides. Taxes were first delayed to May 15, but the IRS updated the relief measure on February 24, pushing the deadline back to October 16.
Disaster-impacted areas in Alabama and Georgia were also given a May 15 deadline before the IRS pushed it back to October 16 after tornadoes tore through the states.
In late March, the IRS also pushed back the tax deadline for residents of Cross, Lonoke and Pulaski counties in Arkansas. Those residents now have until July 31 to pay their 2022 taxes.
AccuWeather Director of Forecast Operations Dan DePodwin told Newsweek that IRS tax relief is a common response after a federal disaster is declared. He said the disasters can be one-off events like a tornado or prolonged events such as California’s repetitive storms and the snowmelt that is causing problems.
When the Federal Emergency Management Agency (FEMA) issues a disaster declaration following a traumatic event such as floods, wildfires or tornados, the IRS can offer several tax relief options.
“Generally, the IRS will authorize disaster tax relief to all areas identified on a disaster declaration if FEMA identifies at least one area qualifying for their Individual Assistance program,” the IRS says on its website.
Tax relief options include the IRS granting taxpayers in the affected area more time to pay their taxes or allowing taxpayers with damaged or lost property to file for a casualty loss tax deduction.
Newsweek reached out to FEMA by email for comment.