What This Bill Does
This bill lets people affected by federally declared disasters adjust their tax credits (financial breaks from the government) based on their earnings from the previous year instead of the disaster year. This helps disaster victims get larger tax credits if the disaster reduced their income. The bill is called the "Tax Fairness for Disaster Victims Act."
Who It Affects
Individuals who lived in a disaster area when a federally declared disaster occurred and saw their earned income drop during that year. Married couples filing joint tax returns where at least one spouse lived in the disaster area.
Key Provisions
• People affected by federally declared disasters can choose to use their earnings from the year before the disaster to calculate certain tax credits instead of using their reduced earnings from the disaster year (Sec. 2(a)(1)(A)).
• If someone's Social Security taxes (money withheld from paychecks for Social Security) dropped during the disaster year, they can use their Social Security taxes from the previous year to calculate one specific tax credit (Sec. 2(a)(1)(B)).
• On joint tax returns, this rule applies if either spouse is a qualified disaster victim, and both spouses' earnings and Social Security taxes from the previous year are added together (Sec. 2(a)(3)).
• The IRS will treat incorrect use of earnings or Social Security taxes under this rule the same way it treats math or clerical errors on tax forms (Sec. 6213(g)(2)(W)).
What Changes
If this becomes law, disaster victims will be able to calculate certain tax credits using the year before the disaster happened instead of the disaster year, potentially resulting in larger tax refunds or credits. The IRS will accept corrections to these calculations without penalty.
Important Definitions
• **Qualified individual:** A person whose home on the first day of a federally declared disaster was in the disaster area.
• **Applicable date:** The first day of the time period that the Federal Emergency Management Agency says the disaster occurred.
• **Federally declared disaster:** Has the same meaning given in the tax code's section about casualty losses (Sec. 165(i)(5)).
• **Social Security taxes:** The tax amount defined elsewhere in the tax code (Sec. 24(d)(2)).
Effective Date
This law applies to tax years that begin after the date the bill becomes law (Sec. 2(c)).
I
118TH CONGRESS
1ST SESSION H. R. 2619
To amend the Internal Revenue Code of 1986 to provide a lookback rule
in the case of certain federally declared disasters for amounts related
to earned income for purposes of determining certain tax credits.
IN THE HOUSE OF REPRESENTATIVES
APRIL 13, 2023
Ms. PORTER (for herself, Ms. MACE, Mr. HARDER of California, and Mr.
LIEU) introduced the following bill; which was referred to the Committee
on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
a lookback rule in the case of certain federally declared
disasters for amounts related to earned income for pur-
poses of determining certain tax credits.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE.
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This Act may be cited as the ‘‘Tax Fairness for Dis-
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aster Victims Act’’.
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•HR 2619 IH
SEC. 2. LOOKBACK RULE IN CASE OF CERTAIN FEDERALLY
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DECLARED DISASTERS FOR AMOUNTS RE-
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LATED TO EARNED INCOME FOR PURPOSES
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OF DETERMINING CERTAIN TAX CREDITS.
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(a) IN GENERAL.—Section 32 of the Internal Rev-
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enue Code of 1986 is amended by inserting after sub-
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section (f) the following new subsection:
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‘‘(g) LOOKBACK RULE FOR DETERMINING AMOUNTS
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RELATED TO EARNED INCOME IN CASE OF CERTAIN
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FEDERALLY DECLARED DISASTERS.—
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‘‘(1) IN GENERAL.—In the case of a qualified
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individual who elects the application of this sub-
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section (at such time and in such manner as the
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Secretary may provide)—
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‘‘(A) if the earned income of the taxpayer
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for the taxable year which includes the applica-
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ble date is less than the earned income of the
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taxpayer for the preceding taxable year, the
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credits allowed under this section and section
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24(d) shall be determined by substituting—
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‘‘(i) such earned income for the pre-
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ceding taxable year, for
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‘‘(ii) such earned income for the tax-
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able year which includes the applicable
24
date, and
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•HR 2619 IH
‘‘(B) if the social security taxes of the tax-
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payer for the taxable year which includes the
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applicable date is less than the social security
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taxes of the taxpayer for the preceding taxable
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year, the credit allowed under section 24(d)
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shall be determined by substituting—
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‘‘(i) such social security taxes for the
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preceding taxable year, for
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‘‘(ii) such social security taxes for the
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taxable year which includes the applicable
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date.
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‘‘(2) DEFINITIONS.—For purposes of this sub-
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section—
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‘‘(A) QUALIFIED INDIVIDUAL.—The term
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‘qualified individual’ means any individual
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whose principal place of abode on the applicable
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date was located in a disaster area with respect
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to a federally declared disaster.
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‘‘(B) APPLICABLE DATE.—The term ‘ap-
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plicable date’ means, with respect to any feder-
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ally declared disaster, the first day of the period
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specified by the Federal Emergency Manage-
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ment Agency as the period during which such
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disaster occurred.
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•HR 2619 IH
‘‘(C) FEDERALLY
DECLARED
DISASTER;
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DISASTER AREA.—The terms ‘federally declared
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disaster’ and ‘disaster’ have the respective
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meanings given such terms by section 165(i)(5).
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‘‘(D) SOCIAL SECURITY TAXES.—The term
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‘social security taxes’ has the meaning given
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such term by section 24(d)(2).
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‘‘(3) APPLICATION
TO
JOINT
RETURNS.—For
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purposes of paragraph (1), in the case of a joint re-
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turn—
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‘‘(A) such paragraph shall apply if either
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spouse is a qualified individual,
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‘‘(B) the earned income of the taxpayer for
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the preceding taxable year shall be the sum of
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the earned income of each spouse for such pre-
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ceding taxable year, and
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‘‘(C) the social security taxes of the tax-
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payer for the preceding taxable year shall be
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the sum of the social security taxes of each
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spouse for such preceding taxable year.
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‘‘(4) UNIFORM APPLICATION OF ELECTION.—
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Any election made under paragraph (1) shall apply
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for all purposes of paragraph (1).
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‘‘(5) NO EFFECT ON DETERMINATION OF GROSS
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INCOME, ETC.—Except as otherwise provided in this
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•HR 2619 IH
subsection, this title shall be applied without regard
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to any substitution under paragraph (1).’’.
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(b) TREATMENT AS MATHEMATICAL OR CLERICAL
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ERRORS.—Section 6213(g)(2) of such Code is amended
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by striking ‘‘and’’ at the end of subparagraph (U), by
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striking the period at the end of subparagraph (V) and
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inserting ‘‘, and’’, and by inserting after subparagraph (V)
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the following new subparagraph:
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‘‘(W) an incorrect use of earned income or
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social security taxes pursuant to section
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32(g).’’.
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(c) EFFECTIVE DATE.—The amendments made by
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this section shall apply to determinations of earned income
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and social security taxes for taxable years beginning after
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the date of the enactment of this Act.
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Æ
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