House- and Senate-Approved Revised Disaster Tax Relief Bill Heads to White House

The House has approved a revised disaster relief bill. The Disaster Tax Relief and Airport and Airway Extension Bill of 2017 (HR 3823) passed on September 28 by a 264-to-155 vote. The Senate approved the measure the same day, but with an amendment removing a flood insurance provision. The House quickly approved the amended version.

Fast Track

The House voted down the original bill on September 25 by a 245-to-171 vote. At that time, it was brought to the floor using a fast-track procedure requiring a two-thirds majority for approval. However, it failed to garner enough support among Democrats. Therefore, on September 28, the revised bill was brought back to the House floor under a rule requiring only a simple majority.

“The House’s bill goes further by authorizing tax relief for individuals and businesses affected by the recent hurricanes in Puerto Rico and the Virgin Islands, and Texas and Florida as well, because these disaster victims shouldn’t suffer a tax bill on top of their losses,” Senate Majority Leader Mitch McConnell, R-Ky., said on the Senate floor on September 28. He added: “We need to pass that legislation here in the Senate without delay.”

Disaster Relief

The disaster relief bill, as now approved by the Senate will, among other things:

(1) eliminate the current law requirements in the disaster areas that uncompensated personal casualty losses exceed 10 percent of adjusted gross income to qualify for deduction;

(2) eliminate the current law requirement that taxpayers itemize deductions to access this tax relief;

(3) provide an exception to the 10-percent early retirement plan withdrawal penalty for qualified hurricane relief distributions

(4) allow for the re-contribution of retirement plan withdrawals for home purchases cancelled due to eligible disasters;

(5) provide flexibility for loans from retirement plans for qualified hurricane relief;

(6) temporarily suspend limitations on charitable contribution deductions associated with qualified hurricane relief made before December 31, 2017;

(7) provide a tax credit for 40 percent of wages (up to $6,000 per employee) paid by a disaster-affected employer to each employee from a core disaster area; and

(8) allow taxpayers to refer to earned income from the immediately preceding year for purposes of determining the Earned Income Tax Credit and Child Tax Credit for the 2017 tax year.

By Jessica Jeane, Wolters Kluwer News Staff

Disaster Tax Relief and Airport and Airway Extension Act of 2017, HR 3823

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