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Congress approves special tax breaks from Harvey, Irma and Maria victims

 

Date: September 28, 2017
Source: TC Palm
Author:  Ledyard King

 

WASHINGTON— Hurricane Irma victims will be able to draw from retirement accounts without penalty to pay for repairs, one of several provisions in a tax relief bill Congress passed Thursday.

The bill, which also assists those affected by Hurricanes Harvey and Maria, won approval 264-155 despite objections by many Democrats who said Superstorm Sandy victims in New Jersey and New York five years ago did not get the same treatment. The Senate bill passed a similar bill without objection later in the afternoon.

The tax provisions were combined with a bill both parties wanted to pass to extendthrough March theauthorization for the Federal Aviation Administration, which is due to expire Saturday night.

The tax measures in the bill are designedto help hurricane-ravaged areas in the following ways:

Casualty losses: Currently, taxpayers candeductlosses from their income taxes if they exceed 10% of adjusted gross income, and the taxpayer itemizes. Both of those requirements would be eliminated in the bill, so designated storm victims could write off all their losses, regardless of whether they itemize.

Retirement withdrawals: The bill would lift the 10% penalty on withdrawing funds from many retirement accounts, including IRAs, to pay for disaster recovery. It also wouldprovide more flexibility for borrowing fromaccounts.

Expanded charitable deductions: The current limit on deducting charitable contributions — taxpayers generally can only deduct 50% of their income — would be lifted for donations to hurricane relief, so people making large gifts could write more of them off. It would also change rules for applying large write-offs to multiple years of tax returns.

Employment relief: A tax credit would be providedof 40% of wages, up to $6,000 per employee for a disaster-affected employer from a core disaster area.

The relief is eligible only to those living in counties that the federal government has declared eligible for individual or public assistance.

Asimilar bill stalled earlier this week after Northeast lawmakers, arguing that Sandy victims had been forgotten, held up the measure.

Though Congress approved a $15 billion disaster aid package for Harvey and Irma within days of its introduction, and said a much larger package would be coming later this year, it took three months to pass a $60 billion package for Sandy, and then Republicans overwhelmingly opposed it.

Rep. Carlos Curbelo, a Florida Republican whose district includes the Keys, accused Democrats of playing politics.

"Can we do more?Yes. But that is no excuse to vote 'no' on this legislation," Curbelo said.

Rep. Bill Pascrell, D-N.J., said during debate Wednesday night that he and Rep. Tom Reed, R-N.Y., had been sponsoring a bill for five years that would take politics out of the discussion completely by makingseveral tax breaks automatic when major disasters are declared.

Pascrell said his attempts to get tax relief for people in the Northeast in 2012 that was similar to the assistance provided after Hurricane Katrina in 2005 never got a hearing in the Republican-led Congress. He said the latest bill, which was first unveiled last Friday,never went through the Ways and Means Committee, where the chairman, Kevin Brady, represents part of Texas flooded by Harvey.

"Tax relief should not be reserved only for victims of a storm that happened to impact the home district of the Ways and Means chairman," Pascrell said. "This bill needlessly pits residents of Texas and Florida against residents of New York and New Jersey."

Most Democrats voted against the bill but several from Florida voted yes, saying it was too important to reject.

“This month, Hurricane Irma hit my district in North Florida with incredible strength, leading to massive devastation," said Al Lawson, D-Tallahassee. "We must do everything we can from implementing tax provisions that help with recovery efforts to advocating for additional funding that help my constituents rebuild their homes and businesses. I look forward to continuing working with my colleagues in Congress on additional measures to help those devastated by natural disasters."