On Sunday, May 9, The Federal Motor Carrier Safety Administration issued a regional Emergency Declaration for Washington, D.C., and 17 states in response to a cyberattack on one of the largest fuel pipelines, the Colonial Pipeline. The Emergency Declaration provides regulatory relief under 49 CFR Parts 300-399.
Administrators at the Colonial Pipeline learned of the cyberattack on Friday, May 7 and took some of its systems offline. Additionally, in response to the recent attack, President Biden signed an Executive Order to improve the nation’s cybersecurity and protect the federal government’s network.
The system outage put many in a state of panic, as they anticipated a potential gas shortage. The Colonial Pipeline, which has 5,500 miles of pipeline, supplies more than 100 million gallons of gas daily; this means many businesses and individuals were impacted by the cyberattack.
A cyberattack means a regional gas shortage
In particular, commercial real estate investors who own gas stations were most impacted by the recent cyberattacks. Many gas stations in Virginia, Georgia, and North Carolina faced a severe gas shortage. To track the gas supply in your area, the site GasBuddy can be used to monitor this crisis; the sections coded in red are the locations where gas is completely sold out.
As a result of the gas shortage, three states have declared a state of emergency: Virginia, Georgia, and North Carolina. Commercial real estate investors in these states should closely monitor their state government’s website for up-to-date information regarding the state of emergency.
Major disaster declaration
While three states have declared a state of emergency, the White House has declared the events a major disaster.
When the White House declares a major disaster, a wide range of federal assistance can be provided to individuals and to public infrastructure. So far, the Biden administration has issued an executive order, which outlines the administration's plan for a federal agency-wide response.
In addition to administrative response, whenever there is a declared disaster, individuals and businesses can receive some relief during tax season.
The IRS has yet to issue any specific guidance for those impacted by the Colonial Pipeline cyberattack, but in general, taxpayers (such as individuals, businesses, sole proprietors, and shareholders in S corporations) in a federally declared disaster area can qualify for disaster relief.
To qualify for disaster relief, the taxpayer does not have to be physically located in the disaster area but must have been impacted by the disaster. To claim disaster-related relief, it's always best to work with your tax advisor to ensure that you receive the most current tax guidance.
The Millionacres bottom line
While FEMA has yet to list the regions impacted by the Colonial Pipeline cyberattacks as impacted by a federally declared disaster, the White House has already called the attacks a major disaster. Affected taxpayers should keep an eye on both FEMA’s and the IRS’s websites to learn of any available relief and/or remedies for 2020 and 2021 tax years.