On December 10, 2012, Senators Charles Schumer (D-NY) and Robert Menendez (D-NJ) introduced legislation to give tax relief to victims of Superstorm Sandy. The provisions apply to victims of Sandy, as well as any state that has suffered from a FEMA-declared major disaster in 2012. Following are some of the major provisions of the proposed legislation:
v Full tax deductions for expenses relating to disaster cleanup;
v Waiving of penalties for early withdrawal from retirement plans;
v Additional exemptions for those who provide free housing to displaced individuals;
v Tax credit for businesses with over 200 employees that continued to pay wages even though the business could not operate;
v Accelerated depreciation for business equipment purchased as a result of the disaster;
v Increased limitation on charitable contributions for disaster relief (no limit as to the percentage of adjustable income that can be donated);
v Expanded availability of, and reduced limitations for, casualty loss deductions;
v Extended Net Operating Loss carryback;
v Relaxed mortgage revenue bond rules regarding eligible purchasers;
v Increased business expensing allowances;
v Increase in New Market Tax Credit for CDEs in disaster areas;
v Exempts all disaster mitigation payments from taxable income;
v Additional Mortgage Cancellation Relief;
v Work opportunity tax credit for businesses that hire people who lived in the disaster area;
v Look back rule for Earned Income Tax Credit and Child Tax Credit;
v Increased rehab tax credits;
v Recovery Zone bonding authority;
v Tax-exempt advanced refunding;
v Increased depreciation allowance’
v Enhanced Medicaid assistance to states; and
v Increased availability of the Low-Income Housing Tax Credit.
Key elements of this last provision include:
- For 2013, 2014, and 2015, affected states will be able to allocate up to $8.00 per capita in tax credits (as opposed to the regular $2.25 for 2013); and
- Increased credit value for areas hit by Hurricane Irene in 2011.
Keep in mind that this is proposed legislation. If it becomes law, we will provide an overview of the details.