Generally an individual trader must have made the automatically approved election in writing between January 1, 2007 and April 17, 2007  (Under a federal statute enacted decades ago, holidays observed in the District of Columbia have impact nationwide on tax issues, not just in D.C. Under recently-enacted city legislation, April 16 is a holiday in the District of Columbia).*  The written document must have been filed (we suggest traders use certified mail with return-receipt-requested) with the IRS office where the trader normally mails his or her tax filings (attached to form 1040, 4868, 1040X etc.). Special, more liberal rules allowed certain individuals and entities such as S-corporations, Trading Partnerships and Limited Liability Companies to elect Mark-to-Market under less restrictive procedures.

At that time the written election document was not available as an IRS "form" but rather you, your tax preparer or attorney must have used a free-form format. This must have indicated: 1) an appropriate description of the election, 2) the first year that you used Mark-to-Market and 3) the specific trade or business (i.e. Schedule C) for which the election is being made.

When you change your method of accounting for gains and losses to the Mark-to-Market method you must also complete an "Application for Change in Accounting Method" form 3115. The properly completed form is then sent concurrently to both the IRS office where you normally mail your tax returns (along with form 1040) and to the national office of the IRS. The form must be filed between the dates January 1, 2008 and October 15, 2008 (we suggest that you use certified mail with return-receipt-requested).

* Arguably many taxpayers have until April 26, 2007 if they or their advisor/preparer were directly impacted by the storm hitting certain Northeastern states on April 15-16, 2007, simply write "April 16 Storm" in red ink on the tax filings.   Or until, June 25, 2007  for Connecticut, Maine, New Hampshire, New Jersey and New York taxpayers in the Presidential Disaster Areas (identified further below) that were struck by severe storms and flooding April 14-18, 2007.  Deadlines for affected taxpayers to file returns, pay taxes and perform other time-sensitive acts falling on or after April 14, 2007 and on or before June 25, 2007 have been postponed to June 25, 2007.

IRS Grants Tax Relief for Certain Northeast Storm, Flooding Victims, including all of our clients no matter where they are located; Taxpayers Have Until June 25 to File Returns

ME-2007-21, NJ-2007-22, NY-2007-18, NH-2007-35, CT-2007-20, April 26, 2007

(Updated 4/26/07 to include six N.J. counties)
(Updated filing deadline to Monday June 25)
(Updated 5/1/07 to add five N.H. counties)
(Updated 5/2/07 to add six N.J. counties)
(Updated 5/4/07 to add three N.Y. counties)
(Updated 5/10/07 to add one N.Y. and two ME. counties)
(Updated 5/11/07 to add one N.H. county)
(Updated 5/25/07 to add four ME counties)
(Updated 6/21/07 to add seven CT counties)
 

CT was also declared Presidential Disaster Area on May 11th http://www.fema.gov/news/newsrelease.fema?id=36200  http://www.allamericanpatriots.com/48723126_connecticut_president_declares_major_disaster_connecticut  IRS has not taken notice as of June 14th.  We are working on securing tax relief for all residents of the State of CT which will also include all clients at TraderStatus.com as well.

Rep Christopher Shays: The CT Post 6/14/07 page #A9 says that the President "declared a major disaster" for CT regarding the April 16th nor-easter. The IRS apparently is not aware of this, and therefore they have not extended tax relief to CT residents. Please see this IRS link for the IRS notice. http://www.irs.gov/newsroom/article/0,,id=169765,00.html  Would you please light a fire under someone at IRS and have the Presidential Disaster Area relief made available to CT residents?

6/21/2007 update : Due to the pressure applied by TraderStatus.com starting on June 14th, and the able assistance of Rep Shays, the IRS has added CT to the list of areas extended.  This means that all of our clients, no matter where they are located,  have been retroactively extended tax filing, penalty and interest expense relief to June 25, 2007 and arguably to make the M2M election.

WASHINGTON - The Internal Revenue Service today announced tax relief for New Jersey, New York and New Hampshire taxpayers in the Presidential Disaster Area that was struck by severe storms and flooding April 14-18, 2007.

The disaster area consists of the following counties:

• Hartford, Fairfield, Litchfield, Middlesex, New Haven, New London and Windham in Connecticut
• Bergen, Burlington, Camden, Essex, Gloucester, Hudson, Mercer, Middlesex, Morris, Passaic, Somerset and Union in New Jersey
• Albany, Dutchess, Orange, Richmond, Rockland, Ulster  and Westchester in New York and
• Belknap, Grafton, Hillsborough, Merrimack, Rockingham and Strafford in New Hampshire.
• Cumberland, Knox, Lincoln, Oxford, Sagadahoc and York in Maine.

Deadlines for affected taxpayers to file returns, pay taxes and perform other time-sensitive acts falling on or after April 14, 2007 and on or before June 25, 2007 have been postponed to June 25, 2007.

In addition, the IRS will waive the failure to deposit penalty for employment and excise deposits due on or after April 14, 2007 and on or before April 30, 2007, as long as the deposits were made by April 30, 2007.

If any affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply during the period from April 14, 2007 to June 25, 2007 (April 14, 2007 to April 30, 2007 for failure to deposit penalties). No penalty or interest will be abated for taxpayers that do not have a filing, payment or deposit due date (including an extended filing or payment due date) during this period.

This tax relief follows a previous extension, in which the IRS granted taxpayers affected by the April 16 storm in the northeastern states until April 26, 2007 to fulfill certain filing obligations.

New Procedure

IRS computer systems now automatically identify taxpayers located in the covered disaster area and apply automatic filing and payment relief. Taxpayers within the covered disaster area no longer need to self-identify by writing on their returns or using the disaster designation in their tax software.

Affected taxpayers who reside or have a business located outside the covered disaster area will be required to call the IRS disaster hotline 1-866-562-5227 to self-identify for disaster relief.

Covered Disaster Area

The counties listed above constitute a covered disaster area for purposes of Treas. Reg. § 301.7508A-1(d)(2) and are entitled to the relief detailed below.

Affected Taxpayers

Taxpayers considered to be affected taxpayers eligible for the postponement of time to file returns, pay taxes and perform other time-sensitive acts are those taxpayers listed in Treas. Reg. § 301.7508A-1(d)(1), and include individuals who live, and businesses whose principal place of business is located, in the covered disaster area. Taxpayers not in the covered disaster area, but whose books, records, or tax professionals’ offices are in the covered disaster area, are also entitled to relief. In addition, all relief workers affiliated with a recognized government or philanthropic organization assisting in the relief activities in the covered disaster area are eligible for relief.

Grant of Relief

Under sections 6081, 6161, and 7508A, the IRS gives affected taxpayers until June 25, 2007, to file most tax returns (including individual, corporate, and estate and trust income tax returns; partnership returns, S corporation returns, and trust returns; estate, gift, and generation-skipping transfer tax returns; and employment and certain excise tax returns), or to make tax payments, including estimated tax payments, that have either an original or extended due date falling on or after April 14, 2007, and on or before June 25, 2007.

The IRS also gives affected taxpayers until June 25, 2007, to perform other time-sensitive actions described in Treas. Reg. § 301.7508A-1(c)(1) and Rev. Proc. 2005-27, 2005-20 I.R.B. 1050, that are due to be performed on or after April 14, 2007, and on or before June 25, 2007 -- such as filing claims for refund for tax year 2003 and making contributions to an IRA or HSA for tax year 2006 that were otherwise due to be filed or made on or before April 17, 2007. This relief also includes the filing of Form 5500 series returns, in the manner described in section 8 of Rev. Proc. 2005-27. The relief described in section 17 of Rev. Proc. 2005-27, pertaining to like-kind exchanges of property, also applies to certain taxpayers who are not otherwise affected taxpayers and may include acts required to be performed before or after the period above.

The postponement of time to file and pay does not apply to information returns in the W-2, 1098, 1099 or 5498 series, or to Forms 1042-S or 8027. Penalties for failure to timely file information returns can be waived under existing procedures for reasonable cause. Likewise, the postponement does not apply to employment and excise tax deposits. The IRS, however, will abate penalties for failure to make timely employment and excise deposits, due on or after April 14, 2007, and on or before April 30, 2007, provided the taxpayer make these deposits by April 30, 2007.

Casualty Losses

Affected taxpayers in a presidentially declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year or last year. Claiming the loss on an original or amended return for last year will get the taxpayer an earlier refund, but waiting to claim the loss on this year’s return could result in a greater tax saving, depending on other income factors.

Individuals may deduct personal property losses that are not covered by insurance or other reimbursements, but they must first subtract $100 for each casualty event and then subtract ten percent of their adjusted gross income from their total casualty losses for the year. For details on figuring a casualty loss deduction, see IRS Publication 547, "Casualties, Disasters and Thefts."

Affected taxpayers claiming the disaster loss on last year’s return should put the Disaster Designation "April 16 Storm" at the top of the form so that the IRS can expedite the processing of the refund.

Other Relief

The IRS will waive the usual fees and expedite requests for copies of previously filed tax returns for affected taxpayers who need them to apply for benefits or to file amended returns claiming casualty losses. Such taxpayers should put the assigned Disaster Designation in red ink at the top of Form 4506, "Request for Copy of Tax Return," or Form 4506-T, "Request for Transcript of Tax Return," as appropriate, and submit it to the IRS.

Affected taxpayers who are contacted by the IRS on a collection or examination matter should explain how the disaster impacts them so that the IRS can provide appropriate consideration to their case.

Taxpayers may download forms and publications from this Web site or may order them by calling 1-800-TAX-FORM (1-800-829-3676). The IRS toll-free number for general tax questions is 1-800-829-1040.

IR-2007-92, April 18, 2007
Update: Some taxpayers in New Jersey, New York have until June 25 to file

WASHINGTON - Taxpayers affected by the major storm that hit the Northeastern United States April 16 now have until Thursday, April 26 to file their tax returns, the Internal Revenue Service said today.

Earlier this week, the IRS gave taxpayers directly impacted by the storm an additional two days beyond the April 17 deadline to meet their tax filing obligations without incurring late filing and payment penalties. After further assessment of conditions across the region affected by the April 16 storm, the IRS has decided to allow affected taxpayers an additional seven days to fulfill their tax filing obligations.

Power outages and public transportation problems made it impossible in some cases for some taxpayers and tax professionals to meet the April 17 filing deadline.

Affected taxpayers can mark their paper tax returns with the words "April 16 Storm." Taxpayers who e-file their returns can use their software’s "disaster" feature, if available.

This news release supersedes IR-2007-89.

THIS NEWS RELEASE SUPERSEDED BY IR-2007-92
IR-2007-89, April 16, 2007

WASHINGTON - Victims of the major storm affecting several Northeastern states on Monday, April 16 will have two additional days to file their tax returns beyond the April 17 tax deadline, the Internal Revenue Service announced today.

Taxpayers directly impacted by the storm have until midnight April 19 to meet their tax filing obligations without incurring late filing and payment penalties.

Across the Northeast, there have been power outages and public transportation problems making it difficult in some cases, if not impossible, for some taxpayers and tax professionals to meet the April 17 filing deadline.

"Because this unusually forceful storm hit within 24 hours of the filing deadline, we are giving affected taxpayers 48 additional hours," IRS Commissioner Mark W. Everson said.

Affected taxpayers can mark their paper tax returns with the words "April 16 Storm." Taxpayers who e-file their returns can use their software's "disaster" feature, if available.

Frequently Asked Questions about the April 16, 2007, Storm Relief
Updated on April 18, 2007

Q: What are the actions that are covered by the additional filing time and payment relief?

A: The additional filing time and payment relief is granted pursuant to Internal Revenue Code (IRC) 6081 and 6161 and published in News Release 2007-92. The relief applies to the following returns and payments originally due April 17, 2007:

• Calendar-year 2006 federal individual income tax returns, whether filed electronically or on paper (Forms 1040, 1040A or 1040EZ).
• Requests for an automatic six-month tax-filing extension on an individual return for calendar-year 2006, whether submitted electronically or on Form 4868.
• Tax-year 2006 income tax balance-due payments, whether made electronically (direct debit or credit card) or by check.
• Corporation income tax returns, including S corporations (Forms 1120, 1120-A and 1120S) for a fiscal year ending on Jan. 31, 2007, and any balance due.
• Calendar-year estate and trust income tax returns (Form 1041) and any balance due.
• Calendar-year 2006 partnership returns (Form 1065).
• Annual information returns (Form 990) and unrelated business income tax returns (Form 990-T) for tax-exempt organizations with a fiscal year ending on Nov. 30, 2006.
• Calendar-year 2006 Form 990-T for certain employee trusts, retirement plans and education savings plans.
• Extension requests for any return.

Q: Who is covered by this extension?

A: This relief applies to taxpayers who have been affected by the storm on April 16 leading up to the April 17, 2007, filing deadline. Affected taxpayers located outside the Northeast are covered if they are prevented from filing in a timely manner because of the storm.

Q: Why aren't specific states listed? Is my state return covered by this extension?

A: We decided not to list specific states because of the widespread nature of the storm and transportation issues that could affect people located outside the Northeastern corridor. You will need to contact your respective state tax agency regarding any filing deadline issues pertaining to your state tax return.

Q:What if I cannot file my return by the extended due date?

A: If you are unable to meet the additional deadline, you should file Form 4868, “Application for Automatic Extension of Time to File U.S. Individual Tax Return” by April 26, 2007.

Q: Do people need to attach a justification?

A: No, but they can mark the April 16 Storm designation on the top front page of their return. If you were eligible for the extension of time to file and pay, and timely filed and paid by April 26, 2007, and you still receive a penalty notice, contact the number on the notice and explain that you were eligible for the extension.