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CONGRESS PASSES FIRST ROUND OF HURRICANE TAX RELIEF

September 22, 2005

Congress yesterday sent to the President H.R. 3768, the first tax relief legislation resulting from Hurricane Katrina.

Provisions include:

- Debt forgiveness income resulting from the hurricane - for example, a cancelled morgage, will not be taxed if cancelled before 2007.

- The 10% of AGI and $100 floor on deductions for casualty losses will be waived for Katrina losses.

- The 10% tax on early IRA and pension distributions will be waived for distributions up to $100,000 for families in the disaster area; tax can be distributed over three years, or waived if the amount is repaid to the account within three years.

- The IRS deadline extension to January 3, 2006 for post 8/29/05 filing deadlines is extended to February 28, 2006. The extension also applies to excise and employement taxes, as well as income and estate and gift taxes.

- Employment-related tax credits will be available through 2005 for employees hired in the disaster area through year-end.

The House Ways and Means Committee has a more complete summary that includes several additional provisions. For a thorough discussion of the provisions, go visit Professor Maule.

Congress is trying to help, but there are a lot of people already down in the disaster area doing great things. Give generously to The Salvation Army, the American Red Cross, or one of the other fine agencies that have been helping out since the winds stopped blowing.

LINK:TAX UPDATE IRS KATRINA RELIEF SUMMARY PAGE

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