What This Bill Does
This bill creates special tax relief rules for people who suffered property damage from Hurricane Ian, Hurricane Nicole, or Hurricane Fiona. The bill allows people in areas officially declared as disaster zones to deduct their casualty losses (financial losses from damage) differently on their tax returns.
Who It Affects
Individuals who experienced property losses in officially declared Hurricane Ian, Hurricane Nicole, or Hurricane Fiona disaster areas; residents of Puerto Rico; and the Secretary of the Treasury.
Key Provisions
* People with qualified disaster-related personal casualty losses can deduct these losses against their regular income and other gains rather than treating them as separate casualty losses (Sec. 2(b)).
* The standard deduction (the amount people can deduct without itemizing) increases by the amount of net disaster losses for affected individuals (Sec. 2(b)).
* The $500 threshold for casualty losses applies to qualified disaster losses from these hurricanes (Sec. 2(b)).
* The Secretary of the Treasury must pay Puerto Rico estimated amounts equal to the tax benefits Puerto Rico residents would receive if Puerto Rico's tax system mirrored the federal system, provided Puerto Rico approves a distribution plan (Sec. 2(c)).
What Changes
If this bill becomes law, people in designated disaster areas from these three hurricanes would be able to deduct their property damage losses on their federal income taxes under new, more favorable rules. Puerto Rico residents would receive direct payments from the federal government calculated to match the tax benefits they would have received under the federal system.
Important Definitions
* "Qualified disaster-related personal casualty losses": Property damage losses that occur in designated disaster areas on or after specific dates (September 23, 2022 for Hurricane Ian; November 7, 2022 for Hurricane Nicole; September 17, 2022 for Hurricane Fiona) and are caused by these hurricanes (Sec. 2(b)(3)).
* "Net disaster loss": The amount by which qualified disaster losses exceed personal casualty gains (Sec. 2(b)(2)).
II
118TH CONGRESS
1ST SESSION
S. 764
To amend the Internal Revenue Code of 1986 to provide special rules for
casualty losses incurred by reason of Hurricane Ian, Hurricane Nicole,
and Hurricane Fiona.
IN THE SENATE OF THE UNITED STATES
MARCH 9, 2023
Mr. SCOTT of Florida (for himself and Mr. RUBIO) introduced the following
bill; which was read twice and referred to the Committee on Finance
A BILL
To amend the Internal Revenue Code of 1986 to provide
special rules for casualty losses incurred by reason of
Hurricane Ian, Hurricane Nicole, and Hurricane Fiona.
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 Tax Relief
4
Act’’.
5
SEC. 2. TAX RELIEF RELATED TO HURRICANE IAN, HURRI-
6
CANE NICOLE, AND HURRICANE FIONA.
7
(a) DEFINITIONS.—For purposes of this section—
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•S 764 IS
(1) HURRICANE
IAN
DISASTER
AREA.—The
1
term ‘‘Hurricane Ian disaster area’’ means an area
2
with respect to which a major disaster has been de-
3
clared by the President before the date of the enact-
4
ment of this section under section 401 of the Robert
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T. Stafford Disaster Relief and Emergency Assist-
6
ance Act by reason of Hurricane Ian.
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(2) HURRICANE NICOLE DISASTER AREA.—The
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term ‘‘Hurricane Nicole disaster area’’ means an
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area with respect to which a major disaster has been
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declared by the President before the date of the en-
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actment of this section under section 401 of the
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Robert T. Stafford Disaster Relief and Emergency
13
Assistance Act by reason of Hurricane Nicole.
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(3) HURRICANE FIONA DISASTER AREA.—The
15
term ‘‘Hurricane Fiona disaster area’’ means an
16
area with respect to which a major disaster has been
17
declared by the President before the date of the en-
18
actment of this section under section 401 of the
19
Robert T. Stafford Disaster Relief and Emergency
20
Assistance Act by reason of Hurricane Fiona.
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(b) SPECIAL RULES FOR QUALIFIED DISASTER-RE-
22
LATED PERSONAL CASUALTY LOSSES.—
23
(1) IN GENERAL.—If an individual has a net
24
disaster loss for any taxable year—
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•S 764 IS
(A) the amount determined under section
1
165(h)(2)(A)(ii) of the Internal Revenue Code
2
of 1986 shall be equal to the sum of—
3
(i) such net disaster loss, and
4
(ii) so much of the excess referred to
5
in the matter preceding clause (i) of sec-
6
tion 165(h)(2)(A) of such Code (reduced
7
by the amount in clause (i) of this sub-
8
paragraph) as exceeds 10 percent of the
9
adjusted gross income of the individual,
10
(B) in the case of qualified disaster-related
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personal casualty losses, section 165(h)(1) of
12
such Code shall be applied to by substituting
13
‘‘$500’’ for ‘‘$500 ($100 for taxable years be-
14
ginning after December 31, 2009)’’,
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(C) the standard deduction determined
16
under section 63(c) of such Code shall be in-
17
creased by the net disaster loss, and
18
(D) section 56(b)(1)(E) of such Code shall
19
not apply to so much of the standard deduction
20
as is attributable to the increase under sub-
21
paragraph (C) of this paragraph.
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(2) NET DISASTER LOSS.—For purposes of this
23
subsection, the term ‘‘net disaster loss’’ means the
24
excess of qualified disaster-related personal casualty
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•S 764 IS
losses over personal casualty gains (as defined in
1
section 165(h)(3)(A) of the Internal Revenue Code
2
of 1986).
3
(3) QUALIFIED DISASTER-RELATED PERSONAL
4
CASUALTY
LOSSES.—For purposes of this sub-
5
section, the term ‘‘qualified disaster-related personal
6
casualty losses’’ means losses described in section
7
165(c)(3) of the Internal Revenue Code of 1986—
8
(A) which arise in the Hurricane Ian dis-
9
aster area on or after September 23, 2022, and
10
which are attributable to Hurricane Ian,
11
(B) which arise in the Hurricane Nicole
12
disaster area on or after November 7, 2022,
13
and which are attributable to Hurricane Nicole,
14
or
15
(C) which arise in the Hurricane Fiona
16
disaster area on or after September 17, 2022,
17
and which are attributable to Hurricane Fiona.
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(c) APPLICATION TO PUERTO RICO.—
19
(1) IN GENERAL.—The Secretary of the Treas-
20
ury shall pay to Puerto Rico amounts estimated by
21
the Secretary of the Treasury as being equal to the
22
aggregate benefits that would have been provided to
23
residents of Puerto Rico by reason of the provisions
24
of this section if a mirror code tax system had been
25
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•S 764 IS
in effect in Puerto Rico. The preceding sentence
1
shall not apply with respect to Puerto Rico unless
2
Puerto Rico has a plan, which has been approved by
3
the Secretary of the Treasury, under which Puerto
4
Rico will promptly distribute such payments to its
5
residents.
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(2) DEFINITION AND SPECIAL RULES.—
7
(A) MIRROR CODE TAX SYSTEM.—For pur-
8
poses of this subsection, the term ‘‘mirror code
9
tax system’’ means, with respect to any posses-
10
sion of the United States, the income tax sys-
11
tem of such possession if the income tax liabil-
12
ity of the residents of such possession under
13
such system is determined by reference to the
14
income tax laws of the United States as if such
15
possession were the United States.
16
(B) TREATMENT OF PAYMENTS.—For pur-
17
poses of section 1324 of title 31, United States
18
Code, the payments under this subsection shall
19
be treated in the same manner as a refund due
20
from a credit provision referred to in subsection
21
(b)(2) of such section.
22
(C) COORDINATION WITH UNITED STATES
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INCOME
TAXES.—In the case of any person
24
with respect to whom a tax benefit is taken into
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•S 764 IS
account with respect to the taxes imposed by
1
any possession of the United States by reason
2
of this section, the Internal Revenue Code of
3
1986 shall be applied with respect to such per-
4
son without regard to the provisions of this sec-
5
tion which provide such benefit.
6
Æ
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