The permanent disaster tax relief proposal that members of the American Institute of CPAs (AICPA) urged members of Congress to support during meetings with legislators in May, as part of the AICPA Spring Council meeting, is gaining traction on Capitol Hill. Companion bills in the U.S. House of Representatives and Senate that were introduced to provide retroactive relief for the victims of Hurricane Sandy and for other victims of federally declared disasters from 2012 to 2015 also include many of the AICPA’s recommendations for permanent tax relief for disaster victims in Title III of the legislation.
The AICPA is a long-time advocate of implementing permanent disaster tax relief provisions because tax relief currently is dependent on Congressional action after every disaster and has been available only sporadically – provided for some disasters, but denied for others without clear reason.
In a September 24 letter to Rep. Tom Reed (R-N.Y.), the sponsor of H.R. 3110, the National Disaster Tax Relief Act of 2015, AICPA Tax Executive Committee Chair Troy K. Lewis wrote about the permanent tax relief provisions in the bill, “We believe these provisions will provide taxpayers with certainty, fairness and the ability to promptly receive the relief they need after a natural disaster, while significantly reducing the administrative burdens on the Internal Revenue Service (IRS) to react to unexpected disasters.”
The AICPA-backed provisions for permanent relief in Title III of H.R. 3110 and S. 1795, identical companion bills introduced by Rep. Reed and Senator David Vitter (R-La.), include the following:
- Extension of the property replacement period from two to five years;
- Extension of the net operating loss carryback to five years;
- Authorization to use retirement account funds to pay for disaster expenses;
- Waiver of individual casualty loss limitations; and
- Provision of a credit to employers for a portion of the wages paid or incurred to workers who are not able to work at the disaster-damaged business.
The AICPA will continue its efforts to have permanent tax relief provisions enacted into law so that similarly situated citizens across the country will be treated alike and receive automatic, legally mandated access to the same tax benefits for comparable losses.