DS News - Bank of America

82 expected hurricanes and wildfires, is racing to adjust to its new role as coordinator of the federal government's response to the novel coronavirus, a challenge for an agency more accustomed to dealing with natural disasters." e New York Times contributed to the conversation, adding, "e Federal Emergency Management Agency, the office leading the federal government's coronavirus response nationwide, is running short of employees who are trained in some of its most important front-line jobs, according to interviews with current and former officials. With wildfire season looming and hurricane season starting in less than two months, the shortfalls could complicate federal response to disasters nationwide. But even as the virus puts new stress on the agency, it must also remain prepared to handle more typical natural disasters. Federal scientists last month predicted that 23 states would see moderate to major flooding by the end of May. is week, researchers at Colorado State University warned that this year's hurricane season, which starts June 1, is likely to produce 16 major storms, of which four were likely to become major hurricanes." Awareness of the IRS casualty loss program will take on new significance with the onset of severe weather in 2020, as disaster victims search desperately for options that will provide them the cash they need to begin rebuilding their homes and their lives. If FEMA is unable to respond as quickly as they have in the past with money and necessary resources, homeowners will not only face frustration, but the beginning of their recovery will be delayed. e IRS casualty loss program allows homeowners whose homes have been damaged or destroyed in federally declared disasters to file claims for unreimbursed losses and obtain tax deductions. ose deductions can provide much needed cash at a critical time. Awareness of the IRS casualty loss option for qualifying victims has been disturbingly modest. In recent years, fewer than 10% of those who have suffered unreimbursed losses have filed IRS casualty loss claims. is contributes to mortgage delinquencies, foreclosures, and a decline in creditworthiness for significant sectors of the population. In short, it leads to a decline in the financial health of many Americans. Hurricane Florence, which damaged or destroyed 700,000 homes in North and South Carolina in September of 2018, provides good insight into the scope of the problem. Fewer than 10% of South Carolina homes were covered by the National Flood Insurance Program at the time the hurricane made landfall. is storm, like others in recent years, caused damage in areas not normally impacted by hurricanes. Consequently, only 1% of homeowners in inland counties like Florence and Dillon had flood insurance. is is not an isolated example. We know that fewer than 20% of homeowners who suffered damage during recent hurricanes and floods carried flood insurance. We also know that 60% of all homes in America are underinsured. ere are many reasons homeowners fail to properly insure their homes against disasters. Cost is a factor, as is lack of understanding about policy coverage. However, it is a fact that the frequency and severity of storms is increasing, and they are affecting properties outside of historical impact areas. ere is no single solution designed to make disaster victims whole. Nor should there be. Rather there are a number of options that collectively make it easier for homeowners to survive the economic tsunami following a natural disaster. FEMA manages several government relief programs; lenders and servicers offer help in the form of forbearance and other programs; insurance companies play their central role; local and national organizations step in to provide basic necessities. Despite all of these efforts, few whose homes have been severely damaged escape without some unreimbursed loss. It is not unfair to expect homeowners to share some of the risk in these situations, but when their share becomes so burdensome that they have little choice but to walk away from their homes and their obligations, other solutions need to be instituted or recognized. In this environment, the IRS casualty loss program should be an essential piece of the overall solution, but as mentioned, few homeowners are aware it exists. In fact, few people who rush to the rescue after a disaster are aware of it. Again, the casualty loss program is not meant to be the solution— only a necessary part of a total solution. It is a necessary part because it provides cash; cash that does not have to be repaid. e program is in place; no new regulations are required. It is flexible; victims can file amended tax returns to get cash quickly or include their claim with the next regular tax filing. It is easy; victims only need to provide the required valuations and estimates of loss in order to file claims. Any solution for disaster victims that does not include filing claims for unreimbursed losses under the IRS casualty loss program is an incomplete solution and jeopardizes the financial well-being of those who suffer losses. Mark L. Stockton, creator of automated valuation technology, founded Disaster Relief, LLC, after working with victims of Hurricane Harvey. Using proprietary technology managed by valuation professionals, Disaster Relief can provide property valuations and loss estimates for disasters of any size—including simultaneous disasters—with the transparency and defensibility to withstand IRS audit. You can reach him at mark@disaster-relief.us. The IRS casualty loss program allows homeowners whose homes have been damaged or destroyed in federally declared disasters, to file claims for unreimbursed losses and obtain tax deductions. Those deductions can provide much needed cash at a critical time. Feature By: Mark L. Stockton

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