A pandemic-related disaster is rare. In recent local disasters in some states, politicians failed to make requests to the president because of confusion about the disaster laws, which hurt the taxpayers in those regions.
However, the ability for the federal government and president to help with these tools is something that must be analyzed regardless of whether a mayor or governor doesn’t want to help their citizens.
The most significant helping hand offered by the president and the IRS is the casualty loss deduction, which provides an accelerated tax refund when you live in an area proclaimed as a "federally declared disaster area" by the president.
After the BP oil-spill settlement, most businesses were able to file claims with BP for loss of revenues during the disaster. In the case of a pandemic, there is nobody to sue unless somebody can prove the virus was created or negligently released.
In the case of coronavirus, or COVID-19, if business is affected, taxpayers may be able to claim deductions and other benefits with the authorization by President Donald Trump of designated disaster areas.
6 Items About Federal Disaster Declarations and Relief:
- Governors must generally request disaster declarations and relief.
- A president can override a governor and make declarations.
- Billions of dollars in assistance can be made available quickly.
- Healthcare rules can be waived in favor of the government, people and doctors to act quickly to save lives.
- State Benefits: Billions in major tax breaks and even credits could be claimed by companies with losses operating in the disaster area and state.
- SBA loans could be made available to people injured or affected by a disaster.
What About Disaster Relief and Emergency Assistance?
The Robert T. Stafford Disaster Relief and Emergency Assistance Act of 1988 (Stafford Act) provides the legal authority for the federal government to provide assistance to states during declared major disasters and emergencies.1
The Disaster Relief Fund has several billion dollars immediately available for the emergency needs of state and local governments, but its use is limited to those purposes specifically authorized in the Stafford Act — implementing allowed activities to respond to major disasters and emergencies as defined in the act. Congress can authorize additional funds as needed. The presidential declaration can specify the types of assistance given.
Governors Must Act – Most of the Time
Generally, a governor must make a request. The Robert T. Stafford Disaster Relief and Emergency Assistance Act, 42 U.S.C. §§ 5121-5207 (the Stafford Act) §401 states in part that: "All requests for a declaration by the President that a major disaster exists shall be made by the Governor of the affected State."
Presidential Override Power to Protect States and Citizens
The president may declare an emergency even without first receiving a request from a state, if the emergency involves an facet of "federal primary responsibility" in which primary responsibility for response rests with the federal government, such as an emergency which involves a subject area for which the government exercises exclusive responsibility and authority. For example, declarations were made during the 2001 Pentagon terrorist attack and the 1995 bombing of the Murrah Federal Court Building in Oklahoma City.
Healthcare Emergency Waivers
A Stafford Act declaration can enable other public health response authorities in an emergency. For the secretary of Health and Human Services (HHS) to exercise special waiver authority under Social Security Act Section 1135. This section allows the secretary to temporarily waive or modify certain Medicare, Medicaid, SCHIP, and HIPAA requirements. Further, there must be a public health emergency determination under Section 319 of the Public Health Service Act, as well as a presidential declaration under the Stafford Act or the National Emergencies Act.
What Type of Event Is Covered
Pandemic influenza and various communicable diseases are defined as emergencies eligible for coverage under the Stafford Act. See Disaster Assistance Fact Sheet for 2009 Pandemic Influenza
Business Loans in Disaster Areas
If you are in a declared disaster area and have experienced damage to your business, you may be eligible for financial assistance from the Small Business Administration (SBA). Businesses of any size and most private nonprofit organizations may apply. The website of the Federal Emergency Management Agency (FEMA) lists all federally declared disasters here.
The IRS tips for disaster deductions is listed here.
In the end, disaster declarations can help families and businesses claim tax deductions which can reduce both federal and state taxes and even increase refunds across the board.
Incidentally, since most working Americans now have huge deductibles on insurance for medical treatment due to changes under President Barack Obama, a disaster declaration could also reduce the burden of paying these high-deductible costs which may also qualify as casualty losses.
Overall, the purpose of this article is that pandemic related disaster is rare. In some recent local disasters in some states, politicians failed to make requests to the President because of confusion about the disaster laws which hurt the taxpayers in those regions.
However, the ability for the federal government and president to help with these tools is something that must be analyzed regardless of whether a mayor or governor does not want to help their citizens.
George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is an ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award-winning author and advisory board member to several companies around the world in education, charities, and crypto currency.
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