Washington, D.C. (October 21, 2021) – The American Institute of CPAs (AICPA) is signaling strong support for the bipartisan Disaster Retirement Savings Act (S. 2583), introduced by Senators Bill Cassidy (R-LA) and Bob Menendez (D-NJ). The bill would permanently remove penalties for individuals impacted by natural disasters who choose to use retirement funds to cover unexpected expenses associated with those disasters.
Currently, tax relief is only considered through separate, individual bills following each disaster. The AICPA has been a vocal advocate for a change in this process, urging Congress to enact permanent tax legislation that would take effect immediately following a declaration of a federal disaster.
The AICPA developed 10 recommendations to improve the patchwork situation that currently exists and alleviate tax compliance burdens during and in the aftermath of a disaster. These proposals are designed to help homeowners and business owners alike with the expensive and lengthy process of recovery. The Disaster Retirement Savings Act addresses one of these important recommendations.
“The Disaster Retirement Savings Act puts into legislation a proposal that the AICPA has advocated in favor of for several years,” said AICPA VP of Taxation, Edward Karl, CPA, CGMA. “Taxpayers already overwhelmed by a disaster should have the ability to use their own funds, without penalty, to help them begin the work of rebuilding while they wait for government assistance and insurance reimbursements.”
In a 2013 letter to Members of Congress, the AICPA requested permanent tax provisions related to disaster relief.
In November of 2014, AICPA Tax Executive Committee then-Chair, Troy Lewis, testified before a Senate small business panel, explaining the impact that the current system is having on taxpayers and their advisers.
In July of 2015, Representative Tom Reed (R-NY) introduced the National Tax Relief Disaster Act, which incorporated many of AICPA's proposals.
In July of 2017, AICPA submitted disaster relief provisions in response to then-Senate Finance Committee Chair Orin Hatch’s (UT-R) request for tax reform comments.
In November of 2019, the AICPA commended Rep. Tom Rice (R-SC) in a letter for his continued efforts to provide permanent and consistent tax relief to individuals and businesses affected by natural disasters.
In September of 2021, AICPA voiced strong support for the bipartisan Filing Relief for Natural Disasters Act, introduced by Senator Catherine Cortez Masto (D-NV).
Contact: Veronica Vera