Reps. Crowley, DeLauro, Grimm, Larson, LoBiondo, Pascrell, Rangel, Runyan, Smith Discuss Legislation to Provide Tax Relief to Struggling Families & Businesses
WASHINGTON – To help families and businesses struggling to rebuild in the wake of Hurricane Sandy, U.S. Reps. Joseph Crowley (D-NY), Rosa DeLauro (D-CT), Michael Grimm (R-NY), John Larson (D-CT), Frank LoBiondo (R-NJ), Bill Pascrell, Jr. (D-NJ), Charles B. Rangel (D-NY), Jon Runyan (R-NJ) and Chris Smith (R-NJ) today announced legislation to provide tax relief to the victims of the devastating storm that caused widespread destruction throughout the Northeast. The Hurricane Sandy Tax Relief Act of 2012, modeled after a similar bill passed into law in the wake of Hurricane Katrina, is aimed at providing tax relief for victims of Hurricane Sandy in areas designated as Federal Disaster Areas by the President.
"As we continue to rebuild in the wake of one of the worst natural disasters to hit our region in generations, we must ensure that our communities have the resources they need to begin to put their lives together," said Reps. Crowley, DeLauro, Grimm, Larson, LoBiondo, Pascrell, Rangel, Runyan and Smith. "This bill is a crucial first step in bringing much needed tax relief to help families, communities and business in our region get back on track. We urge our colleagues on both sides of the aisle to support this legislation to help in rebuilding the lives that have been devastated by this historic storm."
The Hurricane Sandy Tax Relief Act of 2012 is sponsored by Rep. Pascrell Bill Pascrell, Jr. (D-NJ) and co-sponsored by Reps. Charles B. Rangel (D-NY), Chris Smith (R-NJ), Frank Pallone (D-NJ), Rosa DeLauro (D-CT), Frank LoBiondo (R-NJ), Rodney Frelinghuysen (R-NJ), Joe Crowley (D-NY), Jon Larson (D-CT), Scott Garrett (R-NJ), Lenard Lance (R-NJ), Michael Grimm (R-NY) and Jon Runyan (R-NJ).
The legislation will compliment the federal government’s relief and recovery efforts by providing additional tax relief to businesses, individuals and municipalities affected by Hurricane Sandy, including:
• Waiver of Adjusted Gross Income limitation for theft/loss deduction, so individuals can deduct the cost of uninsured losses.
• Increase the limitation on charitable contributions for disaster relief.
• Look-back Provision for Child Tax Credit and Earned Income Tax Credit, to allow a family in the affected region to opt to use their previous year's earnings to calculate their Child Tax Credit and Earned Income Tax Credit.
• Allow taxpayers whose principal place of residence is in the Hurricane Sandy Disaster Area and who suffered a loss from Hurricane Sandy, to take distributions from retirement savings accounts with no tax penalty, provided such amount is repaid within three years.
• Allowing businesses to expense the cost of disaster recovery.
• Allowing businesses to use Net Operating Loss to recover past tax payments or reduce future tax payments, if they are operating with no tax liability during the prescribed period.
• Increase in new markets tax credit for investments in community development entities serving Hurricane Sandy disaster areas.
• Allowing public utilities to reduce their tax liability when rebuilding or replacing assets damaged in the storm.
• Work Opportunity Tax Credits for displaced workers.
Public and Municipal Assistance:
• A new state-by-state private activity bond allocation for Sandy-affected areas to rebuild docks and wharfs, commuting facilities, certain housing, water, sewage, and solid waste infrastructure, and facilities used to provide electric energy or gas.
• Increased allocation of the Low Income Housing Tax Credit for declared disaster areas.
• Waiver of certain mortgage revenue bond requirements, easing access to capital.
A section by section of the legislation is included below:
Hurricane Sandy Tax Relief Act of 2012
• Hurricane Sandy Disaster Area: The tax relief in this legislation applies to the “Hurricane Sandy Disaster Area,” which is comprised of the counties affected by Hurricane Sandy that were determined by the President to warrant individual assistance under the Robert T. Stafford Disaster Relief and Emergency Assistance Act by reason of the hurricane.
• Remove Casualty Loss Deduction Limits: The legislation waives the present-law requirement that net casualty losses exceed 10 percent of Adjusted gross income before they are deductible for federal income tax purposes for personal casualty losses suffered as a result of Hurricane Sandy by taxpayers residing in the Hurricane Sandy Disaster Area.
• Increased Charitable Contribution Limits: The legislation increases charitable deduction limits of taxpayers with respect to cash contributions to certain tax exempt organizations made for the purpose of relief efforts related to Hurricane Sandy. If the donations exceed the increased contribution limits, the taxpayer can carry forward the deduction for the succeeding five years. To be eligible for the increased limits, contributions must be made prior to April 15, 2013. In addition, taxpayers may elect to treat eligible contributions to eligible organizations made prior to April 15, 2013, as having been made in 2012.
• Look Back Provision for Child Tax Credit and Earned Income Tax Credit: The legislation allows families that reside or are substantially employed in the Hurricane Sandy Disaster Area to elect to use their previous year's income to calculate the child tax credit TC and the Earned Income Tax Credit .
• Loans from Retirement Plans: The legislation allows taxpayers whose principal place of residence is in the Hurricane Sandy Disaster Area and who suffered a loss on account of Hurricane Sandy to take distributions of up to $100,000 from an IRA or 401(k) account with no tax penalty, provided such amount is repaid within three years.
• Expensing of Qualified Disaster Expenses: The legislation allows businesses in the Hurricane Sandy Disaster Area to elect to expense costs of Hurricane Sandy-related hazardous substance abatement, debris removal, and repairs of business related-related property rather than charging such expenses to capital account.
• Net Operating Loss Carry-back: The legislation provides a five-year carryback of net operating losses attributable to Hurricane Sandy that occur in the Hurricane Sandy Disaster Area.
• Increased Expensing for Hurricane Sandy Qualified Disaster Assistance Property: The legislation increases the expensing limits under section 179 for certain business property that rehabilitates or replaces property damaged or destroyed by Hurricane Sandy in the Hurricane Sandy Disaster Area.
• Expensing of Environmental Remediation Costs: [The legislation allows taxpayers in the Hurricane Sandy Disaster Area to elect to expense qualified environmental remediation expenditures where the contamination that is being remediated is in the disaster area and was caused by the hurricane.]
• New Markets Tax Credit: The legislation provides an allocation of $250 million of New Markets Tax Credits for the purpose of making qualified low-income community investments within the Hurricane Sandy disaster area.
• Public Utilities Casualty Loss: The legislation allows public utilities to treat casualty losses as “specified liability losses,” which are eligible for a 10-year carryback.
• Work Opportunity Tax Credit: The legislation provides businesses in the Hurricane Sandy Disaster Area a tax credit for hiring workers who lost their jobs as a result of the Hurricane Sandy.
Hurricane Sandy Bonds
• Sandy Recovery Bonds: The legislation creates a new state-by-state private activity bond allocation for Sandy-affected areas, including $9.2 billion for each New York and New Jersey and $3.2 billion for Connecticut. The allocation is for bonds issued for the purpose of financing the rebuilding docks and wharfs, commuting facilities, certain housing, water, sewage, and solid waste infrastructure, and facilities used to provide electric energy or gas.
• Low Income Housing Tax Credit: The legislation increases the allocation of the low-income housing tax credits to $8 per individual states containing counties covered by the natural disaster declaration as a result of Hurricane Sandy.
• Waiver of Certain Mortgage Revenue Bond Limitations: The legislation waives the first-time homebuyer rule and purchase and income rules for targeted area residences financed with qualified mortgage bonds. In addition, the proposal increases the amount of a qualified home-improvement loan with respect to residences located in the specified disaster areas disaster areas.