Immediate impact: California CPAs reach out to Katrina victims.

Make a difference.

Who first urged you to "make a difference?" A parent? A teacher? A mentor? A peer?

Making a difference is harder than it seems. Often, our professional and personal lives consume us, so we leave the betterment of the world to someone else--but not always.

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In addition to the more than 27,000 CalCPA members who make a difference every day to their clients and businesses, CalCPA has an extraordinary number of members who are engaged in personal finance education to improve the financial literacy of Californians.

So, it's not surprising when the IRS called CalCPA urgently seeking assistance in California for what then was reported to be up to 20,000 evacuees from Hurricane Katrina, members answered the call.

PART EXPERT, PART IMAGE ENHANCER

CPA Mitzy Barreto was one of hundreds of members who volunteered to assist victims of Hurricane Katrina who had been removed to FEMA disaster recovery centers in Los Angeles as part of a joint effort with the IRS, AICPA and CalCPA. She noticed that almost everyone entering the room purposely avoided the IRS table and headed toward those with information about unemployment insurance, job possibilities and legal aid.

With her infectious smile, she approached the Hurricane Katrina evacuees to tell them that the IRS wasn't there to extract taxes but to help them claim a casualty loss. "You'll get money back from last year's taxes so that you can reconstruct your life," she explained.

Like Barreto, member Margaret Inglis found that evacuees were a little wary about an IRS presence at a recovery center, but she strove to explain how the IRS could assist hurricane victims.

"There were people asking me things like what is the definition of a casualty loss and how do I get started compiling an inventory of my personal property," she says. "The IRS had brochures there that I could walk them through."

The displaced hurricane victims can more than be excused for this reticence. After watching their city ravaged by floodwaters, federal tax details may be just another task on a staggering to do list.

That's where CalCPA members like Barreto and Inglis come in, offering victims a helping hand in reconstructing their finances, one casualty loss claim at a time.

SUBSTANTIAL CONTRIBUTION

Indeed, CalCPA volunteers have tackled the assistance efforts with gusto.

"Their contribution has been substantial," says Derek Ganter, an IRS senior stakeholder liaison, of the CalCPA volunteers. "They have helped us cut through the communication barriers we have with some of the people from the Gulf Coast. They have been very receptive in explaining the tax laws and provisions that apply when a presidential disaster is declared."

The agreement among the three entities was to undertake a pilot program to assist taxpayers at local disaster recovery centers following federally declared disasters. The intent was to focus on California disasters. But everyone knows what happens to best laid plans.

"We didn't anticipate disaster relief centers opening in California following a hurricane in Louisiana, but CalCPA members rose to the occasion," says CalCPA Chair Chris Yahng. "Our members have a long history of providing pro bono assistance to Californians following disasters and now their good works are having national impact. I urge all members to sign up as disaster relief volunteers."

Until the need dissipates, CalCPA volunteers will help evacuees assemble records, fill out claim forms and file tax amendments. Additionally in the new year, several tax days are being planned around the state to help evacuees with their 2005 tax returns.

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CalCPA volunteers who are offering pro bono or other free services in the wake of the Katrina tragedy are participating in CalCPA's efforts to spread the word about the need for disaster preparedness.

Two years ago, members provided financial counseling to victims of the wildfires that devastated swaths of San Diego, San Bernardino, Los Angeles and Ventura counties. Since then, through CalCPA's Dollars & Sense workshop, members have blanketed the state discussing how to protect vital records and prepare financially for disasters.

RELATING WITH EVACUEES

Barreto says that when the hurricane swept through New Orleans and surrounding areas, she wanted to find a way to contribute her services. She was delighted when she received a CalCPA e-mail soliciting volunteers to assist the IRS with its outreach efforts.

"I just felt that there had to be something I could do to help," Barreto relates. "My family and I are doing pretty well and haven't suffered any natural disasters. But here were these people who now have nothing. Their past has been stolen."

Barreto, who volunteered several days of her time to assist evacuees, was particularly delighted that she could show a New Orleans couple how they could claim $16,000 in casualty losses. Their family restaurant had been flooded. "It was just wonderful to be able to explain to them what the IRS could do," Barreto says.

Ganter calls Barreto "a valuable player" and says she related well with the evacuees. "Mitzy developed some bonds and rapport with the Gulf Coast survivors. She was very instrumental in soothing some of the concerns and worries they had. We consider her an honorary IRS employee," he says.

FIRM-TO-FIRM ASSISTANCE

Across town in Santa Monica, CalCPA members were assisting New Orleans evacuees in a different way. The firm of Gumbiner Savett provided jobs for a month to five CPAs from Ericksen Krentel & LaPorte.

Gumbiner COO Michael Savoy said his firm was seeking additional help to complete Oct. 15 filings. When Katrina hit, they realized that CPAs in the hurricane's path would probably be out of work for a while. Gumbiner connected with Ericksen Krentel through a St. Louis marketing firm they both use.

"They were phenomenal tax preparers and reviewers and really helped us in a crunch time," Savoy said of the New Orleans CPAs. "We took them away from thinking about the disaster and their situation back home."

Now back in Louisiana, Ericksen Krentel tax partner Rich Mueller praised the welcome he and his colleagues received at Gumbiner. "Their hospitality was great. They were very accommodating to us." In fact, Gumbiner put up the group in a nearby apartment complex while they were working at the firm.

During their month in Southern California, the Louisianans visited the beach and Disneyland, among other places. Ericksen Krentel tax manager Gina Ruttley says she particularly enjoyed the culinary aspects of visiting Los Angeles. "I've never eaten sushi. Now I love it."

Adds Ruttley about her California sojourn, "It allowed us to have somewhat of a normal life. All the resources that you take for granted on a day-to-day basis weren't available" in New Orleans.

While Gumbiner hopes they can welcome back Ericksen Krentel staffers in February to help during spring tax season, Mueller thinks they'll be too much involved in locating their own clients and assisting them with tax preparation.

"I'm trying to get in touch with people. One of our New Orleans clients has a summer home in North Carolina, and I tracked him down with Yahoo search. I'm e-mailing my clients to let them know where I am and that we're still in business. I also phone elderly clients to find out how they are doing," he says.

He and others from his firm are working out of temporary quarters in Gonzales, La.--about 50 miles northwest of New Orleans. But they hope to move back to their old offices in early 2006.

REVENUE RULINGS

Although Katrina caused minimal damage to the homes of Mueller and Ruttley, many of their friends and clients experienced excessive water and wind damage to their property. Such victims of Katrina's wrath will benefit from changes in IRS revenue rulings that member Anna Marie Galdieri was instrumental in obtaining after the devastating Oakland fires of 1993.

These changes include allowing taxpayers to not recognize a gain on insurance proceeds for unscheduled contents destroyed in a disaster, regardless of the use to which taxpayers puts those proceeds. Taxpayers also may continue to deduct otherwise deductible mortgage interest on a destroyed residence during a reasonable period between the destruction of the residence and its sale or reconstruction and reoccupation.

For more about disaster related IRS rulings, see "Lessons Learned" in the January/February 2004 California CPA.

The Katrina Emergency Relief Act of 2005 also provides a litany of tax incentives to help individual and businesses recover from Katrina.

CalCPA member involvement with assisting Katrina victims likely will extend well into 2006, as members continue to prepare tax returns on a pro bono basis.

"Even though we sometimes take adversarial stands with each other, collectively we have the same interests," Ganter says. "We all want to step up to the plate when people encounter disasters. I think (the assistance CalCPA volunteers have provided Katrina evacuees) is indicative of the partnership we can have moving forward hopefully not under such dire circumstances."

RELATED ARTICLE: Sign Up for Disaster Recovery

You can volunteer for CalCPA's disaster recovery efforts at www.calcpa.org/disasterrelief. Our volunteers are available for present needs, such as assisting Hurricane Katrina evacuees, as well as future disaster recovery needs.

CalCPA members can provide pro bono financial recovery advice on everything from dealing with insurance companies to applying for government relief to managing property loss.

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The site includes links to disaster-related tax tips that can help reduce burdens on disaster victims--and ensure that the CPAs advising them achieve the desired tax results. You also will find links to a guide that explains various IRS revenue rulings that address some of the questions raised by the Oakland firestorm, as well as to the Red Cross and various government agencies that provide disaster assistance.

MITZY BARRETO, CPA