Hurricane Florence Tax Relief Act

I 116TH CONGRESS 1ST SESSION H. R. 536 To provide tax relief for the victims of Hurricane Florence, and for other purposes. IN THE HOUSE OF REPRESENTATIVES JANUARY 14, 2019 Mr. HOLDING (for himself, Mr. ROUZER, Mr. MEADOWS, Mr. WALKER, Mr. HUDSON, Mr. BUDD, Ms. FOXX of North Carolina, Mr. RICE of South Carolina, and Mr. JONES) introduced the following bill; which was re- ferred to the Committee on Ways and Means A BILL To provide tax relief for the victims of Hurricane Florence, and for other purposes. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE. 3 This Act may be cited as the ‘‘Hurricane Florence 4 Tax Relief Act’’. 5 SEC. 2. HURRICANE FLORENCE DISASTER ZONE AND DIS- 6 ASTER AREA. 7 (a) HURRICANE FLORENCE DISASTER ZONE.—For 8 purposes of this Act, the term ‘‘Hurricane Florence dis- 9 VerDate Sep 11 2014 23:08 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6201 E:\BILLS\H536.IH H536 pbinns on DSK79D2C42PROD with BILLS 2 •HR 536 IH aster zone’’ means that portion of the Hurricane Florence 1 disaster area determined by the President to warrant indi- 2 vidual or individual and public assistance from the Federal 3 Government under such Act by reason of Hurricane Flor- 4 ence. 5 (b) HURRICANE FLORENCE DISASTER AREA.—The 6 term ‘‘Hurricane Florence disaster area’’ means an area 7 with respect to which a major disaster has been declared 8 by the President before October 1, 2018, under section 9 401 of such Act by reason of Hurricane Florence. 10 SEC. 3. SPECIAL DISASTER-RELATED RULES FOR USE OF 11 RETIREMENT FUNDS. 12 (a) TAX-FAVORED WITHDRAWALS FROM RETIRE- 13 MENT PLANS.— 14 (1) IN GENERAL.—Section 72(t) of the Internal 15 Revenue Code of 1986 shall not apply to any quali- 16 fied hurricane distribution. 17 (2) AGGREGATE DOLLAR LIMITATION.— 18 (A) IN GENERAL.—For purposes of this 19 subsection, the aggregate amount of distribu- 20 tions received by an individual which may be 21 treated as qualified hurricane distributions for 22 any taxable year shall not exceed the excess (if 23 any) of— 24 (i) $100,000; over 25 VerDate Sep 11 2014 23:08 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H536.IH H536 pbinns on DSK79D2C42PROD with BILLS 3 •HR 536 IH (ii) the aggregate amounts treated as 1 qualified hurricane distributions received 2 by such individual for all prior taxable 3 years. 4 (B) TREATMENT OF PLAN DISTRIBU- 5 TIONS.—If a distribution to an individual would 6 (without regard to subparagraph (A)) be a 7 qualified hurricane distribution, a plan shall not 8 be treated as violating any requirement of the 9 Internal Revenue Code of 1986 merely because 10 the plan treats such distribution as a qualified 11 hurricane distribution, unless the aggregate 12 amount of such distributions from all plans 13 maintained by the employer (and any member 14 of any controlled group which includes the em- 15 ployer) to such individual exceeds $100,000. 16 (C) CONTROLLED GROUP.—For purposes 17 of subparagraph (B), the term ‘‘controlled 18 group’’ means any group treated as a single 19 employer under subsection (b), (c), (m), or (o) 20 of section 414 of the Internal Revenue Code of 21 1986. 22 (3) AMOUNT DISTRIBUTED MAY BE REPAID.— 23 (A) IN GENERAL.—Any individual who re- 24 ceives a qualified hurricane distribution may, at 25 VerDate Sep 11 2014 23:08 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H536.IH H536 pbinns on DSK79D2C42PROD with BILLS 4 •HR 536 IH any time during the 3-year period beginning on 1 the day after the date on which such distribu- 2 tion was received, make one or more contribu- 3 tions in an aggregate amount not to exceed the 4 amount of such distribution to an eligible retire- 5 ment plan of which such individual is a bene- 6 ficiary and to which a rollover contribution of 7 such distribution could be made under section 8 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 9 457(e)(16), of the Internal Revenue Code of 10 1986, as the case may be. 11 (B) TREATMENT OF REPAYMENTS OF DIS- 12 TRIBUTIONS FROM ELIGIBLE RETIREMENT 13 PLANS OTHER THAN IRAS.—For purposes of 14 the Internal Revenue Code of 1986, if a con- 15 tribution is made pursuant to subparagraph (A) 16 with respect to a qualified hurricane distribu- 17 tion from an eligible retirement plan other than 18 an individual retirement plan, then the taxpayer 19 shall, to the extent of the amount of the con- 20 tribution, be treated as having received the 21 qualified hurricane distribution in an eligible 22 rollover distribution (as defined in section 23 402(c)(4) of such Code) and as having trans- 24 ferred the amount to the eligible retirement 25 VerDate Sep 11 2014 23:08 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H536.IH H536 pbinns on DSK79D2C42PROD with BILLS 5 •HR 536 IH plan in a direct trustee to trustee transfer with- 1 in 60 days of the distribution. 2 (C) TREATMENT OF REPAYMENTS FOR 3 DISTRIBUTIONS FROM IRAS.—For purposes of 4 the Internal Revenue Code of 1986, if a con- 5 tribution is made pursuant to subparagraph (A) 6 with respect to a qualified hurricane distribu- 7 tion from an individual retirement plan (as de- 8 fined by section 7701(a)(37) of such Code), 9 then, to the extent of the amount of the con- 10 tribution, the qualified hurricane distribution 11 shall be treated as a distribution described in 12 section 408(d)(3) of such Code and as having 13 been transferred to the eligible retirement plan 14 in a direct trustee to trustee transfer within 60 15 days of the distribution. 16 (4) DEFINITIONS.—For purposes of this sub- 17 section— 18 (A) QUALIFIED HURRICANE DISTRIBU- 19 TION.—Except as provided in paragraph (2), 20 the term ‘‘qualified hurricane distribution’’ 21 means any distribution from an eligible retire- 22 ment plan made on or after September 13, 23 2018, and before January 1, 2020, to an indi- 24 vidual whose principal place of abode on Sep- 25 VerDate Sep 11 2014 23:08 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H536.IH H536 pbinns on DSK79D2C42PROD with BILLS 6 •HR 536 IH tember 13, 2018, is located in the Hurricane 1 Florence disaster area and who has sustained 2 an economic loss by reason of Hurricane Flor- 3 ence. 4 (B) ELIGIBLE RETIREMENT PLAN.—The 5 term ‘‘eligible retirement plan’’ shall have the 6 meaning given such term by section 7 402(c)(8)(B) of the Internal Revenue Code of 8 1986. 9 (5) INCOME INCLUSION SPREAD OVER 3-YEAR 10 PERIOD.— 11 (A) IN GENERAL.—In the case of any 12 qualified hurricane distribution, unless the tax- 13 payer elects not to have this paragraph apply 14 for any taxable year, any amount required to be 15 included in gross income for such taxable year 16 shall be so included ratably over the 3-taxable- 17 year period beginning with such taxable year. 18 (B) SPECIAL RULE.—For purposes of sub- 19 paragraph (A), rules similar to the rules of sub- 20 paragraph (E) of section 408A(d)(3) of the In- 21 ternal Revenue Code of 1986 shall apply. 22 (6) SPECIAL RULES.— 23 (A) EXEMPTION OF DISTRIBUTIONS FROM 24 TRUSTEE TO TRUSTEE TRANSFER AND WITH- 25 VerDate Sep 11 2014 23:08 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H536.IH H536 pbinns on DSK79D2C42PROD with BILLS 7 •HR 536 IH HOLDING RULES.—For purposes of sections 1 401(a)(31), 402(f), and 3405 of the Internal 2 Revenue Code of 1986, qualified hurricane dis- 3 tributions shall not be treated as eligible roll- 4 over distributions. 5 (B) QUALIFIED HURRICANE DISTRIBU- 6 TIONS TREATED AS MEETING PLAN DISTRIBU- 7 TION REQUIREMENTS.—For purposes the Inter- 8 nal Revenue Code of 1986, a qualified hurri- 9 cane distribution shall be treated as meeting 10 the requirements of sections 401(k)(2)(B)(i), 11 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) 12 of such Code. 13 (b) RECONTRIBUTIONS OF WITHDRAWALS FOR 14 HOME PURCHASES.— 15 (1) RECONTRIBUTIONS.— 16 (A) IN GENERAL.—Any individual who re- 17 ceived a qualified distribution may, during the 18 period beginning on September 13, 2018, and 19 ending on February 28, 2019, make one or 20 more contributions in an aggregate amount not 21 to exceed the amount of such qualified distribu- 22 tion to an eligible retirement plan (as defined in 23 section 402(c)(8)(B) of the Internal Revenue 24 Code of 1986) of which such individual is a 25 VerDate Sep 11 2014 23:08 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H536.IH H536 pbinns on DSK79D2C42PROD with BILLS 8 •HR 536 IH beneficiary and to which a rollover contribution 1 of such distribution could be made under sec- 2 tion 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), 3 of such Code, as the case may be. 4 (B) TREATMENT OF REPAYMENTS.—Rules 5 similar to the rules of subparagraphs (B) and 6 (C) of subsection (a)(3) shall apply for purposes 7 of this subsection. 8 (2) QUALIFIED DISTRIBUTION.—For purposes 9 of this subsection, the term ‘‘qualified distribution’’ 10 means any distribution— 11 (A) described in section 12 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only 13 to the extent such distribution relates to finan- 14 cial hardship), 403(b)(11)(B), or 72(t)(2)(F), 15 of the Internal Revenue Code of 1986; 16 (B) received after February 28, 2018, and 17 before October 1, 2018; and 18 (C) which was to be used to purchase or 19 construct a principal residence in the Hurricane 20 Florence disaster area, but which was not so 21 purchased or constructed on account of Hurri- 22 cane Florence. 23 (c) LOANS FROM QUALIFIED PLANS.— 24 VerDate Sep 11 2014 23:08 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H536.IH H536 pbinns on DSK79D2C42PROD with BILLS 9 •HR 536 IH (1) INCREASE IN LIMIT ON LOANS NOT TREAT- 1 ED AS DISTRIBUTIONS.—In the case of any loan 2 from a qualified employer plan (as defined under 3 section 72(p)(4) of the Internal Revenue Code of 4 1986) to a qualified individual made during the pe- 5 riod beginning on the date of the enactment of this 6 Act and ending on December 31, 2019— 7 (A) clause (i) of section 72(p)(2)(A) of 8 such Code shall be applied by substituting 9 ‘‘$100,000’’ for ‘‘$50,000’’; and 10 (B) clause (ii) of such section shall be ap- 11 plied by substituting ‘‘the present value of the 12 nonforfeitable accrued benefit of the employee 13 under the plan’’ for ‘‘one-half of the present 14 value of the nonforfeitable accrued benefit of 15 the employee under the plan’’. 16 (2) DELAY OF REPAYMENT.—In the case of a 17 qualified individual with an outstanding loan on or 18 after September 13, 2018, from a qualified employer 19 plan (as defined in section 72(p)(4) of the Internal 20 Revenue Code of 1986)— 21 (A) if the due date pursuant to subpara- 22 graph (B) or (C) of section 72(p)(2) of such 23 Code for any repayment with respect to such 24 loan occurs during the period beginning on Sep- 25 VerDate Sep 11 2014 23:08 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H536.IH H536 pbinns on DSK79D2C42PROD with BILLS 10 •HR 536 IH tember 13, 2018, and ending on December 31, 1 2019, such due date shall be delayed for 1 year; 2 (B) any subsequent repayments with re- 3 spect to any such loan shall be appropriately 4 adjusted to reflect the delay in the due date 5 under paragraph (1) and any interest accruing 6 during such delay; and 7 (C) in determining the 5-year period and 8 the term of a loan under subparagraph (B) or 9 (C) of section 72(p)(2) of such Code, the period 10 described in subparagraph (A) shall be dis- 11 regarded. 12 (3) QUALIFIED HURRICANE FLORENCE INDI- 13 VIDUAL.—For purposes of this subsection, the term 14 ‘‘qualified Hurricane Florence individual’’ means an 15 individual whose principal place of abode on Sep- 16 tember 13, 2018, is located in the Hurricane Flor- 17 ence disaster area and who has sustained an eco- 18 nomic loss by reason of Hurricane Florence. 19 (d) PROVISIONS RELATING TO PLAN AMEND- 20 MENTS.— 21 (1) IN GENERAL.—If this subsection applies to 22 any amendment to any plan or annuity contract, 23 such plan or contract shall be treated as being oper- 24 VerDate Sep 11 2014 23:08 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H536.IH H536 pbinns on DSK79D2C42PROD with BILLS 11 •HR 536 IH ated in accordance with the terms of the plan during 1 the period described in paragraph (2)(B)(i). 2 (2) AMENDMENTS TO WHICH SUBSECTION AP- 3 PLIES.— 4 (A) IN GENERAL.—This subsection shall 5 apply to any amendment to any plan or annuity 6 contract which is made— 7 (i) pursuant to any provision of this 8 section, or pursuant to any regulation 9 issued by the Secretary or the Secretary of 10 Labor under any provision of this section; 11 and 12 (ii) on or before the last day of the 13 first plan year beginning on or after Janu- 14 ary 1, 2020, or such later date as the Sec- 15 retary may prescribe. 16 In the case of a governmental plan (as defined 17 in section 414(d) of the Internal Revenue Code 18 of 1986), clause (ii) shall be applied by sub- 19 stituting the date which is 2 years after the 20 date otherwise applied under clause (ii). 21 (B) CONDITIONS.—This subsection shall 22 not apply to any amendment unless— 23 (i) during the period— 24 VerDate Sep 11 2014 23:08 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H536.IH H536 pbinns on DSK79D2C42PROD with BILLS 12 •HR 536 IH (I) beginning on the date that 1 this section or the regulation de- 2 scribed in subparagraph (A)(i) takes 3 effect (or in the case of a plan or con- 4 tract amendment not required by this 5 section or such regulation, the effec- 6 tive date specified by the plan); and 7 (II) ending on the date described 8 in subparagraph (A)(ii) (or, if earlier, 9 the date the plan or contract amend- 10 ment is adopted), 11 the plan or contract is operated as if such 12 plan or contract amendment were in effect; 13 and 14 (ii) such plan or contract amendment 15 applies retroactively for such period. 16 SEC. 4. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS 17 AFFECTED BY HURRICANE FLORENCE. 18 (a) IN GENERAL.—For purposes of section 38 of the 19 Internal Revenue Code of 1986, in the case of an eligible 20 employer, the Hurricane Florence employee retention 21 credit shall be treated as a credit listed in subsection (b) 22 of such section. For purposes of this section, the Hurri- 23 cane Florence employee retention credit for any taxable 24 year is an amount equal to 40 percent of the qualified 25 VerDate Sep 11 2014 23:08 Jan 30, 2019 Jkt 089200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H536.IH H536 pbinns on DSK79D2C42PROD with BILLS 13 •HR 536 IH wages with respect to each eligible employee of [Text truncated for display. Full text available on Congress.gov.]