In the aftermath of Hurricanes Harvey and Irma, there is speculation that permanent disaster relief tax provisions might be considered by congress, either as standalone legislation or as part of a tax reform package.
The American Institute of CPAs is a long-time advocate of implementing permanent disaster tax relief provisions. Currently, such tax relief 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.
Provisions favored by the AICPA are part of the National Disaster Relief Act (H.R. 3679) that was reintroduced by U.S. Reps. Tom Reed (R-N.Y.) and Bill Pascrell (D-N.J.) on September 5. It would help victims of natural disasters recover faster with tax relief to alleviate cleanup and rebuilding expenses.
Edward Karl, AICPA vice president of taxation, says the two hurricanes are dramatic examples of why there needs to be serious consideration of permanent disaster relief. “Our hearts go out to the victims. And the CPA profession will work to help them get back on their feet financially by advocating for permanent tax relief after disasters like these.”
The AICPA in July called on Congress to make 10 tax provisions permanent to help disaster victims. They range from waiving individual casualty loss limitations to increasing expensing limits, and allowing a full or partial housing exemption for displaced individuals. “Because tax relief is dependent on Congressional action after every disaster, it has been available only sporadically,” the AICPA explained in a special publication. “The CPA profession believes Congress should provide fairness, certainty and consistency with permanent tax relief measures that automatically apply once the President issues a disaster declaration.”
In a related development, the AICPA Tax Section has unlocked important disaster-related content on aicpa.org in an effort to help tax practitioners prepare their clients and communities for the aftermath of Hurricanes Harvey and Irma.
The primary purpose of the Casualty Loss Practice Guide is to assist practitioners in dealing with certain tax problems that arise when a client is affected by a natural disaster. The guide discusses rules for casualty losses and deductions for involuntary conversions and provides information on relevant Internal Revenue Service (IRS) publications, as well as other useful material.
This in-depth webcast features Jerry Schreiber, CPA, discussing tax relief for individuals and businesses affected by a disaster.