Kansas City Mo. ? Almost five months after Hurricane Katrina chased Yolonda Prevost from her East New Orleans neighborhood to her sister’s place in Kansas City, she spends her days trying to get back home – searching for apartments and arranging for repairs to her drowned house.

The last thing Prevost wants to worry about is taxes.

Taxpayers like Prevost are a big question mark this year as tax preparers ranging from the nation’s leader, H&R Block Inc., to mom-and-pop accountants, gear up for this year’s tax season.

Some in the industry predict the hurricanes will cause a flood of new clients as victims and those who contributed to recovery efforts wrestle with the myriad exemptions and refund programs put into place following hurricanes Katrina, Rita and Wilma.

John Hewitt, chief executive of Virginia Beach, Va.-based Liberty Tax Service, estimated his company would add 250,000 returns to the 1 million returns it filed last year, partly because of the crush of Katrina-related returns.

“No question we’ll pick up customers this year,” Hewitt said.

Others say the increase won’t be that dramatic, but the complexity of returns will skyrocket. And it won’t be limited to the Gulf Coast as hurricane evacuees have fled to temporary homes throughout the country.

“The spreading out of clients that we experienced from the New Orleans area is probably a negative net because it’s hard to know exactly where those folks are and ensuring that we have the staff to serve them well (where they end up),” said H&R Block Inc. CEO Mark Ernst at a recent analyst meeting.

“The offset is there are very targeted tax incentives for people who are affected by the hurricanes, which may cause people (to look) for more personal assistance,” Ernst said. “That is probably the biggest wild card in our internal look at the upcoming tax season.”

Debris remains piled outside of an H&R Block office in East New Orleans almost five months after Hurricane Katrina. Tax preparers say this season is hard to predict because more assistance may be needed with changes in tax laws due to the hurricanes in 2005.

The Internal Revenue Service this year expects taxpayers to file 134.9 million individual income returns, a 1.6 percent increase from 2005. The IRS won’t guess how many returns will be affected by the hurricanes but said it expected many returns would be delayed until next year.

The most recent IRS statistics show that in 2004 tax professionals prepared 60 percent of all returns, up from 55 percent the year before.

Whether that number will greatly increase this year is unknown, although experts in the field said changes in the tax laws almost require professional tax help.

Changes in tax laws

Some of the hurricane-related provisions in this year’s tax laws, according to the Internal Revenue Service:

¢Extends last fall’s deadlines for paying taxes, filing returns or other tax-related activities to Feb. 28.

¢Allows victims to claim losses on prior year tax returns, which can lead to faster refunds.

¢Lets hurricane-affected businesses claim an extra depreciation allowance for property put into service after Hurricane Katrina. Gives businesses extra tax credits for retaining workers in the hurricane-affected areas or for hiring workers either in areas affected by Hurricane Katrina or who were displaced from those areas to other parts of the country. Lets companies deduct half the cost of cleanup and demolition expenses, as opposed to having to treat them as capital expenditures.

¢Lifts limits on deductions for charitable contributions, provided that the contribution came between Aug. 27 and Jan. 1 and was aimed at hurricane-related relief efforts. Allows homeowners to claim up to $2,000 in exemptions for housing Hurricane Katrina evacuees for free for 60 days or more.

¢Expands education credits for college students attending school in the hurricane-affected regions.