[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[H.R. 8440 Introduced in House (IH)]
<DOC>
116th CONGRESS
2d Session
H. R. 8440
To provide disaster tax relief.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
September 29, 2020
Mr. Thompson of California (for himself, Mr. Blumenauer, and Ms.
Finkenauer) introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on Small
Business, for a period to be subsequently determined by the Speaker, in
each case for consideration of such provisions as fall within the
jurisdiction of the committee concerned
_______________________________________________________________________
A BILL
To provide disaster tax relief.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Disaster Tax
Relief Act of 2020''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. Definitions.
Sec. 3. Special disaster-related rules for use of retirement funds.
Sec. 4. Employee retention credit for employers affected by qualified
disasters.
Sec. 5. Other disaster-related tax relief provisions.
Sec. 6. Treatment of certain possessions.
SEC. 2. DEFINITIONS.
For purposes of this Act--
(1) Qualified disaster area.--
(A) In general.--The term ``qualified disaster
area'' means any area with respect to which a major
disaster was declared, during the period beginning on
December 28, 2019, and ending on the date which is 60
days after the date of the enactment of this Act, by
the President under section 401 of the Robert T.
Stafford Disaster Relief and Emergency Assistance Act
if the incident period of the disaster with respect to
which such declaration is made begins on or before the
date of the enactment of this Act.
(B) COVID-19 exception.--Such term shall not
include any area with respect to which such a major
disaster has been so declared only by reason of COVID-
19.
(2) Qualified disaster zone.--The term ``qualified disaster
zone'' means that portion of any qualified disaster area which
was determined by the President, during the period beginning on
December 28, 2019, and ending on the date which is 60 days
after the date of the enactment of this Act, to warrant
individual or individual and public assistance from the Federal
Government under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act by reason of the qualified disaster
with respect to such disaster area.
(3) Qualified disaster.--The term ``qualified disaster''
means, with respect to any qualified disaster area, the
disaster by reason of which a major disaster was declared with
respect to such area.
(4) Incident period.--The term ``incident period'' means,
with respect to any qualified disaster, the period specified by
the Federal Emergency Management Agency as the period during
which such disaster occurred (except that for purposes of this
Act such period shall not be treated as beginning before
December 28, 2019, or ending after the date which is 30 days
after the date of the enactment of this Act).
SEC. 3. SPECIAL DISASTER-RELATED RULES FOR USE OF RETIREMENT FUNDS.
(a) Tax-Favored Withdrawals From Retirement Plans.--
(1) In general.--Section 72(t) of the Internal Revenue Code
of 1986 shall not apply to any qualified disaster distribution.
(2) Aggregate dollar limitation.--
(A) In general.--For purposes of this subsection,
the aggregate amount of distributions received by an
individual which may be treated as qualified disaster
distributions for any taxable year shall not exceed the
excess (if any) of--
(i) $100,000, over
(ii) the aggregate amounts treated as
qualified disaster distributions received by
such individual for all prior taxable years.
(B) Treatment of plan distributions.--If a
distribution to an individual would (without regard to
subparagraph (A)) be a qualified disaster distribution,
a plan shall not be treated as violating any
requirement of the Internal Revenue Code of 1986 merely
because the plan treats such distribution as a
qualified disaster distribution, unless the aggregate
amount of such distributions from all plans maintained
by the employer (and any member of any controlled group
which includes the employer) to such individual exceeds
$100,000.
(C) Controlled group.--For purposes of subparagraph
(B), the term ``controlled group'' means any group
treated as a single employer under subsection (b), (c),
(m), or (o) of section 414 of the Internal Revenue Code
of 1986.
(D) Special rule for individuals affected by more
than one disaster.--The limitation of subparagraph (A)
shall be applied separately with respect to
distributions made with respect to each qualified
disaster.
(3) Amount distributed may be repaid.--
(A) In general.--Any individual who receives a
qualified disaster distribution may, at any time during
the 3-year period beginning on the day after the date
on which such distribution was received, make 1 or more
contributions in an aggregate amount not to exceed the
amount of such distribution to an eligible retirement
plan of which such individual is a beneficiary and to
which a rollover contribution of such distribution
could be made under section 402(c), 403(a)(4),
403(b)(8), 408(d)(3), or 457(e)(16), of the Internal
Revenue Code of 1986, as the case may be.
(B) Treatment of repayments of distributions from
eligible retirement plans other than iras.--For
purposes of the Internal Revenue Code of 1986, if a
contribution is made pursuant to subparagraph (A) with
respect to a qualified disaster distribution from an
eligible retirement plan other than an individual
retirement plan, then the taxpayer shall, to the extent
of the amount of the contribution, be treated as having
received the qualified disaster distribution in an
eligible rollover distribution (as defined in section
402(c)(4) of such Code) and as having transferred the
amount to the eligible retirement plan in a direct
trustee to trustee transfer within 60 days of the
distribution.
(C) Treatment of repayments of distributions from
iras.--For purposes of the Internal Revenue Code of
1986, if a contribution is made pursuant to
subparagraph (A) with respect to a qualified disaster
distribution from an individual retirement plan (as
defined by section 7701(a)(37) of such Code), then, to
the extent of the amount of the contribution, the
qualified disaster distribution shall be treated as a
distribution described in section 408(d)(3) of such
Code and as having been transferred to the eligible
retirement plan in a direct trustee to trustee transfer
within 60 days of the distribution.
(4) Definitions.--For purposes of this subsection--
(A) Qualified disaster distribution.--Except as
provided in paragraph (2), the term ``qualified
disaster distribution'' means any distribution from an
eligible retirement plan made--
(i) on or after the first day of the
incident period of a qualified disaster and
before the date which is 180 days after the
date of the enactment of this Act, and
(ii) to an individual whose principal place
of abode at any time during the incident period
of such qualified disaster is located in the
qualified disaster area with respect to such
qualified disaster and who has sustained an
economic loss by reason of such qualified
disaster.
(B) Eligible retirement plan.--The term ``eligible
retirement plan'' shall have the meaning given such
term by section 402(c)(8)(B) of the Internal Revenue
Code of 1986.
(5) Income inclusion spread over 3-year period.--
(A) In general.--In the case of any qualified
disaster distribution, unless the taxpayer elects not
to have this paragraph apply for any taxable year, any
amount required to be included in gross income for such
taxable year shall be so included ratably over the 3-
taxable-year period beginning with such taxable year.
(B) Special rule.--For purposes of subparagraph
(A), rules similar to the rules of subparagraph (E) of
section 408A(d)(3) of the Internal Revenue Code of 1986
shall apply.
(6) Special rules.--
(A) Exemption of distributions from trustee to
trustee transfer and withholding rules.--For purposes
of sections 401(a)(31), 402(f), and 3405 of the
Internal Revenue Code of 1986, qualified disaster
distributions shall not be treated as eligible rollover
distributions.
(B) Qualified disaster distributions treated as
meeting plan distribution requirements.--For purposes
the Internal Revenue Code of 1986, a qualified disaster
distribution shall be treated as meeting the
requirements of sections 401(k)(2)(B)(i),
403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of such
Code.
(b) Recontributions of Withdrawals for Home Purchases.--
(1) Recontributions.--
(A) In general.--Any individual who received a
qualified distribution may, during the applicable
period, make 1 or more contributions in an aggregate
amount not to exceed the amount of such qualified
distribution to an eligible retirement plan (as defined
in section 402(c)(8)(B) of the Internal Revenue Code of
1986) of which such individual is a beneficiary and to
which a rollover contribution of such distribution
could be made under section 402(c), 403(a)(4),
403(b)(8), or 408(d)(3), of such Code, as the case may
be.
(B) Treatment of repayments.--Rules similar to the
rules of subparagraphs (B) and (C) of subsection (a)(3)
shall apply for purposes of this subsection.
(2) Qualified distribution.--For purposes of this
subsection, the term ``qualified distribution'' means any
distribution--
(A) described in section 401(k)(2)(B)(i)(IV),
403(b)(7)(A)(ii) (but only to the extent such
distribution relates to financial hardship),
403(b)(11)(B), or 72(t)(2)(F), of the Internal Revenue
Code of 1986,
(B) which was to be used to purchase or construct a
principal residence in a qualified disaster area, but
which was not so used on account of the qualified
disaster with respect to such area, and
(C) which was received during the period beginning
on the date which is 180 days before the first day of
the incident period of such qualified disaster and
ending on the date which is 30 days after the last day
of such incident period.
(3) Applicable period.--For purposes of this subsection,
the term ``applicable period'' means, in the case of a
principal residence in a qualified disaster area with respect
to any qualified disaster, the period beginning on the first
day of the incident period of such qualified disaster and
ending on the date which is 180 days after the date of the
enactment of this Act.
(c) Loans From Qualified Plans.--
(1) Increase in limit on loans not treated as
distributions.--In the case of any loan from a qualified
employer plan (as defined under section 72(p)(4) of the
Internal Revenue Code of 1986) to a qualified individual made
during the 180-day period beginning on the date of the
enactment of this Act--
(A) clause (i) of section 72(p)(2)(A) of such Code
shall be applied by substituting ``$100,000'' for
``$50,000'', and
(B) clause (ii) of such section shall be applied by
substituting ``the present value of the nonforfeitable
accrued benefit of the employee under the plan'' for
``one-half of the present value of the nonforfeitable
accrued benefit of the employee under the plan''.
(2) Delay of repayment.--In the case of a qualified
individual (with respect to any qualified disaster) with an
outstanding loan (on or after the first day of the incident
period of such qualified disaster) from a qualified employer
plan (as defined in section 72(p)(4) of the Internal Revenue
Code of 1986)--
(A) if the due date pursuant to subparagraph (B) or
(C) of section 72(p)(2) of such Code for any repayment
with respect to such loan occurs during the period
beginning on the first day of the incident period of
such qualified disaster and ending on the date which is
180 days after the last day of such incident period,
such due date shall be delayed for 1 year (or, if
later, until the date which is 180 days after the date
of the enactment of this Act),
(B) any subsequent repayments with respect to any
such loan shall be appropriately adjusted to reflect
the delay in the due date under subparagraph (A) and
any interest accruing during such delay, and
(C) in determining the 5-year period and the term
of a loan under subparagraph (B) or (C) of section
72(p)(2) of such Code, the period described in
subparagraph (A) of this paragraph shall be
disregarded.
(3) Qualified individual.--For purposes of this subsection,
the term ``qualified individual'' means any individual--
(A) whose principal place of abode at any time
during the incident period of any qualified disaster is
located in the qualified disaster area with respect to
such qualified disaster, and
(B) who has sustained an economic loss by reason of
such qualified disaster.
(d) Provisions Relating to Plan Amendments.--
(1) In general.--If this subsection applies to any
amendment to any plan or annuity contract, such plan or
contract shall be treated as being operated in accordance with
the terms of the plan during the period described in paragraph
(2)(B)(i).
(2) Amendments to which subsection applies.--
(A) In general.--This subsection shall apply to any
amendment to any plan or annuity contract which is
made--
(i) pursuant to any provision of this
section, or pursuant to any regulation issued
by the Secretary or the Secretary of Labor
under any provision of this section, and
(ii) on or before the last day of the first
plan year beginning on or after January 1,
2020, or such later date as the Secretary may
prescribe.
In the case of a governmental plan (as defined in
section 414(d) of the Internal Revenue Code of 1986),
clause (ii) shall be applied by substituting the date
which is 2 years after the date otherwise applied under
clause (ii).
(B) Conditions.--This subsection shall not apply to
any amendment unless--
(i) during the period--
(I) beginning on the date that this
section or the regulation described in
subparagraph (A)(i) takes effect (or in
the case of a plan or contract
amendment not required by this section
or such regulation, the effective date
specified by the plan), and
(II) ending on the date described
in subparagraph (A)(ii) (or, if
earlier, the date the plan or contract
amendment is adopted),
the plan or contract is operated as if such plan or
contract amendment were in effect, and
(ii) such plan or contract amendment
applies retroactively for such period.
SEC. 4. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED BY QUALIFIED
DISASTERS.
(a) In General.--For purposes of section 38 of the Internal Revenue
Code of 1986, in the case of an eligible employer, the 2020 qualified
disaster employee retention credit shall be treated as a credit listed
at the end of subsection (b) of such section. For purposes of this
subsection, the 2020 qualified disaster employee retention credit for
any taxable year is an amount equal to 40 percent of the qualified
wages with respect to each eligible employee of such employer for such
taxable year. The amount of qualified wages with respect to any
employee which may be taken into account under this subsection by the
employer for any taxable year shall not exceed $6,000 (reduced by the
amount of qualified wages with respect to such employee which may be so
taken into account for any prior taxable year).
(b) Definitions.--For purposes of this section--
(1) Eligible employer.--The term ``eligible employer''
means any employer--
(A) which conducted an active trade or business in
a qualified disaster zone at any time during the
incident period of the qualified disaster with respect
to such qualified disaster zone, and
(B) with respect to whom the trade or business
described in subparagraph (A) is inoperable at any time
during the period beginning on the first day of the
incident period of such qualified disaster and ending
on the date of the enactment of this Act, as a result
of damage sustained by reason of such qualified
disaster.
(2) Eligible employee.--The term ``eligible employee''
means with respect to an eligible employer an employee whose
principal place of employment with such eligible employer
(determined immediately before the qualified disaster referred
to in paragraph (1)) was in the qualified disaster zone
referred to in such paragraph.
(3) Qualified wages.--The term ``qualified wages'' means
wages (as defined in section 51(c)(1) of the Internal Revenue
Code of 1986, but without regard to section 3306(b)(2)(B) of
such Code) paid or incurred by an eligible employer with
respect to an eligible employee at any time on or after the
date on which the trade or business described in paragraph (1)
first became inoperable at the principal place of employment of
the employee (determined immediately before the qualified
disaster referred to in such paragraph) and before the earlier
of--
(A) the date on which such trade or business has
resumed significant operations at such principal place
of employment, or
(B) the date which 150 days after the last day of
the incident period of the qualified disaster referred
to in paragraph (1).
Such term shall include wages paid without regard to whether
the employee performs no services, performs services at a
different place of employment than such principal place of
employment, or performs services at such principal place of
employment before significant operations have resumed. Such
term shall not include any wages taken into account under
section 2301 of the Coronavirus Aid, Relief, and Economic
Security Act.
(c) Special Rules.--
(1) Employee not taken into account more than once.--An
employee shall not be treated as an eligible employee for
purposes of this subsection for any period with respect to any
employer if such employer is allowed a credit under section 51
of the Internal Revenue Code of 1986 with respect to such
employee for such period.
(2) Denial of double benefit.--Any wages taken into account
in determining the credit allowed under this section shall not
be taken into account as wages for purposes of sections 41,
45A, 45P, 45S, 51, and 1396 of the Internal Revenue Code of
1986.
(3) Certain other rules to apply.--For purposes of this
subsection, rules similar to the rules of sections 51(i)(1),
52, and 280C(a), of the Internal Revenue Code of 1986, shall
apply.
(d) Election To Not Take Certain Wages Into Account.--
(1) In general.--This section shall not apply to qualified
wages paid by an eligible employer with respect to which such
employer makes an election (at such time and in such manner as
the Secretary may prescribe) to have this section not apply to
such wages.
(2) Coordination with paycheck protection program.--The
Secretary, in consultation with the Administrator of the Small
Business Administration, shall issue guidance providing that
payroll costs paid or incurred during the covered period shall
not fail to be treated as qualified wages under this section by
reason of an election under paragraph (1) to the extent that a
covered loan of the eligible employer is not forgiven by reason
of a decision under section 1106(g) of the CARES Act. Terms
used in the preceding sentence which are also used in section
1106 of such Act shall have the same meaning as when used in
such section.
(e) Amendment to Paycheck Protection Program.--Section 1106(a)(8)
of the CARES Act is amended by inserting ``, except that such costs
shall not include qualified wages taken into account in determining the
credit allowed under section 4 of the Disaster Tax Relief Act of 2020''
before the period at the end.
SEC. 5. OTHER DISASTER-RELATED TAX RELIEF PROVISIONS.
(a) Special Rules for Qualified Disaster Relief Contributions.--
(1) In general.--In the case of a qualified disaster relief
contribution made by a corporation--
(A) section 2205(a)(2)(B) of the CARES Act shall be
applied first to qualified contributions without regard
to any qualified disaster relief contributions and then
separately to such qualified disaster relief
contribution, and
(B) in applying such section to such qualified
disaster relief contributions, clause (i) thereof shall
be applied--
(i) by substituting ``100 percent'' for
``25 percent'', and
(ii) by treating qualified contributions
other than qualified disaster relief
contributions as contributions allowed under
section 170(b)(2) of the Internal Revenue Code
of 1986.
(2) Qualified disaster relief contribution.--For purposes
of this subsection, the term ``qualified disaster relief
contribution'' means any qualified contribution (as defined in
section 2205(a)(3) of the CARES Act) if--
(A) such contribution--
(i) is paid, during the period beginning on
December 28, 2019, and ending on the date which
is 60 days after the date of the enactment of
this Act, and
(ii) is made for relief efforts in one or
more qualified disaster areas,
(B) the taxpayer obtains from such organization
contemporaneous written acknowledgment (within the
meaning of section 170(f)(8) of such Code) that such
contribution was used (or is to be used) for relief
efforts described in subparagraph (A)(ii), and
(C) the taxpayer has elected the application of
this subsection with respect to such contribution.
(3) Cross-reference.--For the suspension of the limitation
on qualified disaster relief contributions made by an
individual during 2020, see section 2205(a) of the CARES Act.
(b) Special Rules for Qualified Disaster-Related Personal Casualty
Losses.--
(1) In general.--If an individual has a net disaster loss
for any taxable year--
(A) the amount determined under section
165(h)(2)(A)(ii) of the Internal Revenue Code of 1986
shall be equal to the sum of--
(i) such net disaster loss, and
(ii) so much of the excess referred to in
the matter preceding clause (i) of section
165(h)(2)(A) of such Code (reduced by the
amount in clause (i) of this subparagraph) as
exceeds 10 percent of the adjusted gross income
of the individual,
(B) in the case of qualified disaster-related
personal casualty losses, section 165(h)(1) of such
Code shall be applied to by substituting ``$500'' for
``$500 ($100 for taxable years beginning after December
31, 2009)'',
(C) the standard deduction determined under section
63(c) of such Code shall be increased by the net
disaster loss, and
(D) section 56(b)(1)(E) of such Code shall not
apply to so much of the standard deduction as is
attributable to the increase under subparagraph (C) of
this paragraph.
(2) Net disaster loss.--For purposes of this subsection,
the term ``net disaster loss'' means the excess of qualified
disaster-related personal casualty losses over personal
casualty gains (as defined in section 165(h)(3)(A) of the
Internal Revenue Code of 1986).
(3) Qualified disaster-related personal casualty losses.--
For purposes of this subsection, the term ``qualified disaster-
related personal casualty losses'' means losses described in
section 165(c)(3) of the Internal Revenue Code of 1986 which
arise in a qualified disaster area on or after the first day of
the incident period of the qualified disaster to which such
area relates, and which are attributable to such qualified
disaster.
(c) Temporary Special Rule for Determining Earned Income for
Taxpayers Whose Income Was Affected by COVID-19 Disaster.--
(1) In general.--If the earned income of the taxpayer for
the taxpayer's first taxable year beginning in 2020 is less
than the earned income of the taxpayer for the preceding
taxable year, the credits allowed under sections 24(d) and 32
of the Internal Revenue Code of 1986 may, at the election of
the taxpayer, be determined by substituting--
(A) such earned income for the preceding taxable
year, for
(B) such earned income for the taxpayer's first
taxable year beginning in 2020.
(2) Earned income.--
(A) In general.--For purposes of this section, the
term ``earned income'' has the meaning given such term
under section 32(c) of the Internal Revenue Code of
1986.
(B) Application to joint returns.--For purposes of
subsection (a), in the case of a joint return, the
earned income of the taxpayer for the preceding taxable
year shall be the sum of the earned income of each
spouse for such preceding taxable year.
(3) Special rules.--
(A) Errors treated as mathematical error.--For
purposes of section 6213 of the Internal Revenue Code
of 1986, an incorrect use on a return of earned income
pursuant to subsection (a) shall be treated as a
mathematical or clerical error.
(B) No effect on determination of gross income,
etc.--Except as otherwise provided in this subsection,
the Internal Revenue Code of 1986 shall be applied
without regard to any substitution under subsection
(a).
SEC. 6. TREATMENT OF CERTAIN POSSESSIONS.
(a) Payments to Possessions With Mirror Code Tax Systems.--The
Secretary of the Treasury shall pay to each possession of the United
States which has a mirror code tax system amounts equal to the loss (if
any) to that possession by reason of the application of the provisions
of this Act. Such amounts shall be determined by the Secretary of the
Treasury based on information provided by the government of the
respective possession.
(b) Payments to Other Possessions.--The Secretary of the Treasury
shall pay to each possession of the United States which does not have a
mirror code tax system amounts estimated by the Secretary of the
Treasury as being equal to the aggregate benefits (if any) that would
have been provided to residents of such possession by reason of the
provisions of this Act if a mirror code tax system had been in effect
in such possession. The preceding sentence shall not apply unless the
respective possession has a plan, which has been approved by the
Secretary of the Treasury, under which such possession will promptly
distribute such payments to its residents.
(c) Mirror Code Tax System.--For purposes of this section, the term
``mirror code tax system'' means, with respect to any possession of the
United States, the income tax system of such possession if the income
tax liability of the residents of such possession under such system is
determined by reference to the income tax laws of the United States as
if such possession were the United States.
(d) Treatment of Payments.--For purposes of section 1324 of title
31, United States Code, the payments under this section shall be
treated in the same manner as a refund due from a credit provision
referred to in subsection (b)(2) of such section.
<all>