With a more frequent occurrence than anybody would wish for, natural disasters do happen, and it is important for all of us to be aware of the IRS rules and regulations concerning these unfortunate events.

The federal government can declare an area eligible for federal assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act. This allows victims of natural emergencies, such as hurricanes, earthquakes, flooding, tornadoes and extensive fire to seek monetary, tax and shelter relief not normally available.

Tax-wise, certain benefits and write-offs are available to victims. Those owing money from previous years still have to pay it, but if the individual is affected, set installments can be temporarily suspended by petition. Loss of homes are viewed as a "sale," allowing taxpayers to claim deductions.

A disaster assistance tax hot line is in place for people who need special assistance at 866-562-5227.

Tax laws that are created for specific natural disasters always have beginning and ending deadlines and businesses or residents must meet particular loss or location requirements in order to receive these special benefits. These victims are also frequently eligible for the regular emergency tax relief covered in the general tax code for all federally declared disasters.

In the event of a federally declared disaster, Internal Revenue Code section 7508A allows for the suspension period to run up to 12 months and includes the abatement of interest on currently due taxes.

The IRS will generally grant relief to affected taxpayers in areas identified by the Federal Emergency Management Agency (FEMA) to qualify for individual assistance to households and families. This is called the IRS designated disaster area and is generally identified within a given state by county.

The IRS may offer various types of relief to taxpayers and tax professionals affected by a disaster or major emergency.

In the event relief is granted, the IRS will issue a notice or news release providing information on postponed actions.

Failure to file and pay penalties may be abated.

Requests for tax transcripts and copies of filed returns will be expedited and associated fees may be waived.

The IRS may also relax rules on certain regulatory certifications.

One example is relaxing the low income housing resident income limitation.

Taxpayers not located in the designated disaster area now must have records located there that are necessary to meet a suspended tax deadline in order for them to qualify for relief.

When relief is granted, affected taxpayers will include:

IRS computers will systemically identify taxpayers whose address of record is within the designated disaster area and code their account for the relief.

A theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and it must have been done with criminal intent.

You may not deduct casualty and theft losses covered by insurance unless you file a timely claim for reimbursement, and you must reduce the loss by the amount of any reimbursement.

A casualty does not include normal wear and tear or progressive deterioration.

For run-of-the-mill casualty losses, the IRS requires you to determine the fair value of your personal property loss.

If your property is personal-use property or is not completely destroyed, the amount of your casualty or theft loss is the lesser of:

• The adjusted basis of your property, or
  

• The decrease in fair market value of your property as a result of the casualty or theft.
  

If your property is business or income-producing property, such as rental property, and is completely destroyed, and the fair market value of the property before the casualty is less than the adjusted basis of the property, then the amount of your loss is your adjusted basis.

The loss, regardless of whether it is a casualty or theft loss, must be reduced by any salvage value and by any insurance or other reimbursement you receive or expect to receive. The adjusted basis of your property is usually your cost, increased or decreased by certain events such as improvements or depreciation.

If you itemize, you are required to claim your casualty and theft losses as an itemized deduction on Form 1040, Schedule A.

If you don’t itemize, casualty and theft losses need to be reported on Form 4684. Section A is for personal-use property, and Section B is used for business or income-producing property.

As always, before taking any deduction, it is best to consult with a tax or financial professional.