Short title

This Act may be cited as the

Disaster Tax Relief Act of 2019

Definitions

For purposes of this Act— (1)

Qualified disaster area

The term qualified disaster area means any area with respect to which a major disaster was declared, during the period beginning on January 1, 2018, and ending on the date of the enactment of this Act, by the President under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act if the incident period of the disaster with respect to which such declaration is made begins after January 1, 2018, and before the date of the enactment of this Act. (2)

Qualified disaster zone

The term qualified disaster zone means that portion of any qualified disaster area which is determined by the President to warrant individual or individual and public assistance from the Federal Government under the Robert T. Stafford Disaster Relief and Emergency Assistance Act by reason of the qualified disaster with respect to such disaster area. (3)

Qualified disaster

The term qualified disaster means, with respect to any qualified disaster area, the disaster by reason of which a major disaster was declared with respect to such area. (4)

Incident period

The term incident period means, with respect to any qualified disaster, the period specified by the Federal Emergency Management Agency as the period during which such disaster occurred.

Special disaster-related rules for use of retirement funds

(a)

Tax-Favored withdrawals from retirement plans

(1)

In general

Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any qualified disaster distribution. (2)

Aggregate dollar limitation

(A)

In general

For purposes of this subsection, the aggregate amount of distributions received by an individual which may be treated as qualified disaster distributions for any taxable year shall not exceed the excess (if any) of— (i)$100,000, over (ii)the aggregate amounts treated as qualified disaster distributions received by such individual for all prior taxable years. (B)

Treatment of plan distributions

If a distribution to an individual would (without regard to subparagraph (A)) be a qualified disaster distribution, a plan shall not be treated as violating any requirement of the Internal Revenue Code of 1986 merely because the plan treats such distribution as a qualified disaster distribution, unless the aggregate amount of such distributions from all plans maintained by the employer (and any member of any controlled group which includes the employer) to such individual exceeds $100,000. (C)

Controlled group

For purposes of subparagraph (B), the term controlled group means any group treated as a single employer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986. (D)

Special rule for individuals affected by more than one disaster

The limitation of subparagraph (A) shall be applied separately with respect to distributions made with respect to each qualified disaster. (3)

Amount distributed may be repaid

(A)

In general

Any individual who receives a qualified disaster distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make one or more contributions in an aggregate amount not to exceed the amount of such distribution to an eligible retirement plan of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 457(e)(16), of the Internal Revenue Code of 1986, as the case may be. (B)

Treatment of repayments of distributions from eligible retirement plans other than IRAs

For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a qualified disaster distribution from an eligible retirement plan other than an individual retirement plan, then the taxpayer shall, to the extent of the amount of the contribution, be treated as having received the qualified disaster distribution in an eligible rollover distribution (as defined in section 402(c)(4) of such Code) and as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution. (C)

Treatment of repayments of distributions from IRAs

For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to subparagraph (A) with respect to a qualified disaster distribution from an individual retirement plan (as defined by section 7701(a)(37) of such Code), then, to the extent of the amount of the contribution, the qualified disaster distribution shall be treated as a distribution described in section 408(d)(3) of such Code and as having been transferred to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution. (4)

Definitions

For purposes of this subsection— (A)

Qualified disaster distribution

Except as provided in paragraph (2), the term qualified disaster distribution means any distribution from an eligible retirement plan made after the incident beginning date of a qualified disaster and on or before December 31 of the year after the year in which the incident period with respect to the disaster begins, to an individual whose principal place of abode at any time during the incident period of such qualified disaster is located in the qualified disaster area with respect to such qualified disaster and who has sustained an economic loss by reason of such qualified disaster. (B)

Eligible retirement plan

The term eligible retirement plan shall have the meaning given such term by section 402(c)(8)(B) of the Internal Revenue Code of 1986. (5)

Income inclusion spread over 3-year period

(A)

In general

In the case of any qualified disaster distribution, unless the taxpayer elects not to have this paragraph apply for any taxable year, any amount required to be included in gross income for such taxable year shall be so included ratably over the 3-taxable-year period beginning with such taxable year. (B)

Special rule

For purposes of subparagraph (A), rules similar to the rules of subparagraph (E) of section 408A(d)(3) of the Internal Revenue Code of 1986 shall apply. (6)

Special rules

(A)

Exemption of distributions from trustee to trustee transfer and withholding rules

For purposes of sections 401(a)(31), 402(f), and 3405 of the Internal Revenue Code of 1986, qualified disaster distributions shall not be treated as eligible rollover distributions. (B)

Qualified disaster distributions treated as meeting plan distribution requirements

For purposes of the Internal Revenue Code of 1986, a qualified disaster distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(I), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of such Code. (b)

Recontributions of withdrawals for home purchases

(1)

Recontributions

(A)

In general

Any individual who received a qualified distribution may, during the applicable period, make one or more contributions in an aggregate amount not to exceed the amount of such qualified distribution to an eligible retirement plan (as defined in section 402(c)(8)(B) of the Internal Revenue Code of 1986) of which such individual is a beneficiary and to which a rollover contribution of such distribution could be made under section 402(c), 403(a)(4), 403(b)(8), or 408(d)(3), of such Code, as the case may be. (B)

Treatment of repayments

Rules similar to the rules of subparagraphs (B) and (C) of subsection (a)(3) shall apply for purposes of this subsection. (2)

Qualified distribution

For purposes of this subsection, the term qualified distribution means any distribution— (A)described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only to the extent such distribution relates to financial hardship), 403(b)(11)(B), or 72(t)(2)(F), of the Internal Revenue Code of 1986, (B)which was to be used to purchase or construct a principal residence in a qualified disaster area, but which was not so used on account of the qualified disaster with respect to such area, and (C)which was received on or after the date that is 270 days before the first day of incident period of the disaster, and before the date which is 30 days after the last day of the incident period of such qualified disaster. (3)

Applicable period

For purposes of this subsection, the term applicable period means, with respect to any qualified distribution, the period beginning on the first day of the incident period of the disaster and ending on the date that is 180 days after the last day of such incident period. (c)

Loans from qualified plans

(1)

Increase in limit on loans not treated as distributions

In the case of any loan from a qualified employer plan (as defined under section 72(p)(4) of the Internal Revenue Code of 1986) to a qualified individual made during the period beginning on the date of the enactment of this Act and ending on December 31 of the year after the year in which the incident period with respect to the disaster begins— (A)clause (i) of section 72(p)(2)(A) of such Code shall be applied by substituting $100,000 for $50,000, and (B)clause (ii) of such section shall be applied by substituting the present value of the nonforfeitable accrued benefit of the employee under the plan for one-half of the present value of the nonforfeitable accrued benefit of the employee under the plan. (2)

Delay of repayment

In the case of a qualified individual (with respect to any qualified disaster) with an outstanding loan on or after the incident beginning date (of such qualified disaster) from a qualified employer plan (as defined in section 72(p)(4) of the Internal Revenue Code of 1986)— (A)if the due date pursuant to subparagraph (B) or (C) of section 72(p)(2) of such Code for any repayment with respect to such loan occurs during the period beginning on the incident beginning date of such qualified disaster and ending on December 31 of the year after the year in which the incident period with respect to the disaster begins, such due date shall be delayed for 1 year, (B)any subsequent repayments with respect to any such loan shall be appropriately adjusted to reflect the delay in the due date under paragraph (1) and any interest accruing during such delay, and (C)in determining the 5-year period and the term of a loan under subparagraph (B) or (C) of section 72(p)(2) of such Code, the period described in subparagraph (A) of this paragraph shall be disregarded. (3)

Qualified individual

For purposes of this subsection, the term qualified individual means any individual— (A)whose principal place of abode at any time during the incident period of any qualified disaster is located in the qualified disaster area with respect to such qualified disaster, and (B)who has sustained an economic loss by reason of such qualified disaster. (d)

Provisions relating To plan amendments

(1)

In general

If this subsection applies to any amendment to any plan or annuity contract, such plan or contract shall be treated as being operated in accordance with the terms of the plan during the period described in paragraph (2)(B)(i). (2)

Amendments to which subsection applies

(A)

In general

This subsection shall apply to any amendment to any plan or annuity contract which is made— (i)pursuant to any provision of this section, or pursuant to any regulation issued by the Secretary or the Secretary of Labor under any provision of this section, and (ii)on or before the last day of the first plan year beginning on or after January 1, 2020, or such later date as the Secretary may prescribe.

In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), clause (ii) shall be applied by substituting the date which is 2 years after the date otherwise applied under clause (ii).

(B)

Conditions

This subsection shall not apply to any amendment unless— (i)during the period— (I)beginning on the date that this section or the regulation described in subparagraph (A)(i) takes effect (or in the case of a plan or contract amendment not required by this section or such regulation, the effective date specified by the plan), and (II)ending on the date described in subparagraph (A)(ii) (or, if earlier, the date the plan or contract amendment is adopted),

the plan or contract is operated as if such plan or contract amendment were in effect, and

(ii)such plan or contract amendment applies retroactively for such period.

Employee retention credit for employers affected by qualified disasters

(a)

In general

For purposes of section 38 of the Internal Revenue Code of 1986, in the case of an eligible employer, the qualified disaster employee retention credit shall be treated as a credit listed in subsection (b) of such section. For purposes of this subsection, the qualified disaster employee retention credit for any taxable year is an amount equal to 40 percent of the qualified wages with respect to each eligible employee of such employer for such taxable year. For purposes of the preceding sentence, the amount of qualified wages which may be taken into account with respect to any individual shall not exceed $6,000. (b)

Definitions

For purposes of this section— (1)

Eligible employer

The term eligible employer means any employer— (A)which conducted an active trade or business in a qualified disaster zone at any time during the incident period of the qualified disaster with respect to such qualified disaster zone, and (B)with respect to whom the trade or business described in subparagraph (A) is inoperable at any time after the incident beginning date of such qualified disaster, and before January 1 of the year after the year of such incident beginning date, as a result of damage sustained by reason of such qualified disaster. (2)

Eligible employee

The term eligible employee means with respect to an eligible employer an employee whose principal place of employment at any time during the incident period of the qualified disaster referred to in paragraph (1) with such eligible employer was in the qualified disaster zone referred to in such paragraph. (3)

Qualified wages

The term qualified wages means wages (as defined in section 51(c)(1) of the Internal Revenue Code of 1986, but without regard to section 3306(b)(2)(B) of such Code) paid or incurred by an eligible employer with respect to an eligible employee at any time during the period described in paragraph (1)(B), and which occurs during the period— (A)beginning on the date on which the trade or business described in paragraph (1) first became inoperable at the principal place of employment of the employee immediately before the qualified disaster referred to in such paragraph, and (B)ending on the date on which such trade or business has resumed significant operations at such principal place of employment.

Such term shall include wages paid without regard to whether the employee performs no services, performs services at a different place of employment than such principal place of employment, or performs services at such principal place of employment before significant operations have resumed.

(c)

Certain rules To apply

For purposes of this subsection, rules similar to the rules of sections 51(i)(1), 52, and 280C(a), of the Internal Revenue Code of 1986, shall apply. (d)

Employee not taken into account more than once

An employee shall not be treated as an eligible employee for purposes of this subsection for any period with respect to any employer if such employer is allowed a credit under section 51 of the Internal Revenue Code of 1986 with respect to such employee for such period.

Other disaster-related tax relief provisions

(a)

Temporary suspension of limitations on charitable contributions

(1)

In general

Except as otherwise provided in paragraph (2), subsection (b) of section 170 of the Internal Revenue Code of 1986 shall not apply to qualified contributions and such contributions shall not be taken into account for purposes of applying subsections (b) and (d) of such section to other contributions. (2)

Treatment of excess contributions

For purposes of section 170 of the Internal Revenue Code of 1986— (A)

Individuals

In the case of an individual— (i)

Limitation

Any qualified contribution shall be allowed only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer’s contribution base (as defined in subparagraph (H) of section 170(b)(1) of such Code) over the amount of all other charitable contributions allowed under section 170(b)(1) of such Code. (ii)

Carryover

If the aggregate amount of qualified contributions made in the contribution year (within the meaning of section 170(d)(1) of such Code) exceeds the limitation of clause (i), such excess shall be added to the excess described in the portion of subparagraph (A) of such section which precedes clause (i) thereof for purposes of applying such section. (B)

Corporations

In the case of a corporation— (i)

Limitation

Any qualified contribution shall be allowed only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer’s taxable income (as determined under paragraph (2) of section 170(b) of such Code) over the amount of all other charitable contributions allowed under such paragraph. (ii)

Carryover

Rules similar to the rules of subparagraph (A)(ii) shall apply for purposes of this subparagraph. (3)

Qualified contributions

(A)

In general

For purposes of this subsection, the term qualified contribution means any charitable contribution (as defined in section 170(c) of the Internal Revenue Code of 1986) if— (i)such contribution— (I)is made for relief efforts in one or more qualified disaster areas, and (II)is paid during the period beginning on the first day of the incident period for any such disaster, and ending on December 31 of the year in which such incident period begins, in cash to an organization described in section 170(b)(1)(A) of such Code, (ii)the taxpayer obtains from such organization contemporaneous written acknowledgment (within the meaning of section 170(f)(8) of such Code) that such contribution was used (or is to be used) for relief efforts described in clause (i)(I), and (iii)the taxpayer has elected the application of this subsection with respect to such contribution. (B)

Exception

Such term shall not include a contribution by a donor if the contribution is— (i)to an organization described in section 509(a)(3) of the Internal Revenue Code of 1986, or (ii)for the establishment of a new, or maintenance of an existing, donor advised fund (as defined in section 4966(d)(2) of such Code). (C)

Application of election to partnerships and S corporations

In the case of a partnership or S corporation, the election under subparagraph (A)(iii) shall be made separately by each partner or shareholder. (b)

Special rules for qualified disaster-Related personal casualty losses

(1)

In general

If an individual has a net disaster loss for any taxable year— (A)the amount determined under section 165(h)(2)(A)(ii) of the Internal Revenue Code of 1986 shall be equal to the sum of— (i)such net disaster loss, and (ii)so much of the excess referred to in the matter preceding clause (i) of section 165(h)(2)(A) of such Code (reduced by the amount in clause (i) of this subparagraph) as exceeds 10 percent of the adjusted gross income of the individual, (B)section 165(h)(1) of such Code shall be applied by substituting $500 for $500 ($100 for taxable years beginning after December 31, 2009), (C)the standard deduction determined under section 63(c) of such Code shall be increased by the net disaster loss, and (D)section 56(b)(1)(E) of such Code shall not apply to so much of the standard deduction as is attributable to the increase under subparagraph (C) of this paragraph. (2)

Net disaster loss

For purposes of this subsection, the term net disaster loss means the excess of qualified disaster-related personal casualty losses over personal casualty gains (as defined in section 165(h)(3)(A) of the Internal Revenue Code of 1986). (3)

Qualified disaster-related personal casualty losses

For purposes of this subsection, the term qualified disaster-related personal casualty losses means losses described in section 165(c)(3) of the Internal Revenue Code of 1986 which arise in a qualified disaster area on or after the incident beginning date of the qualified disaster to which such area relates, and which are attributable to such qualified disaster. (c)

Special rule for determining earned income

(1)

In general

In the case of a qualified individual, if the earned income of the taxpayer for the applicable taxable year is less than the earned income of the taxpayer for the preceding taxable year, the credits allowed under sections 24(d) and 32 of the Internal Revenue Code of 1986 may, at the election of the taxpayer, be determined by substituting— (A)such earned income for the preceding taxable year, for (B)such earned income for the applicable taxable year. (2)

Qualified individual

For purposes of this subsection, the term qualified individual means any individual whose principal place of abode at any time during the incident period of any qualified disaster was located— (A)in the qualified disaster zone with respect to such qualified disaster, or (B)in the qualified disaster area with respect to such qualified disaster (but outside the qualified disaster zone with respect to such qualified disaster) and such individual was displaced from such principal place of abode by reason of such qualified disaster. (3)

Applicable taxable year

The term applicable taxable year means, with respect to any qualified individual, any taxable year which includes any day during the incident period of the qualified disaster to which the qualified disaster area referred to in paragraph (2) relates. (4)

Earned income

For purposes of this subsection, the term earned income has the meaning given such term under section 32(c) of the Internal Revenue Code of 1986. (5)

Special rules

(A)

Application to joint returns

For purposes of paragraph (1), in the case of a joint return for an applicable taxable year— (i)such paragraph shall apply if either spouse is a qualified individual, and (ii)the earned income of the taxpayer for the preceding taxable year shall be the sum of the earned income of each spouse for such preceding taxable year. (B)

Uniform application of election

Any election made under paragraph (1) shall apply with respect to both sections 24(d) and 32 of the Internal Revenue Code of 1986. (C)

Errors treated as mathematical error

For purposes of section 6213 of the Internal Revenue Code of 1986, an incorrect use on a return of earned income pursuant to paragraph (1) shall be treated as a mathematical or clerical error. (D)

No effect on determination of gross income, etc

Except as otherwise provided in this subsection, the Internal Revenue Code of 1986 shall be applied without regard to any substitution under paragraph (1).

Treatment of certain possessions

(a)

Payments to Guam and the Commonwealth of the Northern Mariana Islands

The Secretary of the Treasury shall pay to Guam and the Commonwealth of the Northern Mariana Islands amounts equal to the loss to that possession by reason of the application of the provisions of this Act. Such amounts shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession. (b)

Payments to American Samoa

(1)

In general

The Secretary of the Treasury shall pay to American Samoa amounts estimated by the Secretary of the Treasury as being equal to the aggregate benefits that would have been provided to residents of American Samoa by reason of the provisions of this Act if a mirror code tax system had been in effect in American Samoa. The preceding sentence shall not apply unless American Samoa has a plan, which has been approved by the Secretary of the Treasury, under which American Samoa will promptly distribute such payments to its residents. (2)

Mirror code tax system

For purposes of this subsection, the term mirror code tax system means, with respect to any possession of the United States, the income tax system of such possession if the income tax liability of the residents of such possession under such system is determined by reference to the income tax laws of the United States as if such possession were the United States. (c)

Treatment of payments

For purposes of section 1324 of title 31, United States Code, the payments under this section shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section.

Automatic extension of filing deadline

(a)

In general

Section 7508A is amended by adding at the end the following new subsection:

(d)

Mandatory 60-Day extension

In the case of— (1)any individual whose principal place of abode is in a disaster area (as defined in section 165(i)(5)(B)), and (2)any taxpayer if the taxpayer’s principal place of business (other than the business of performing services of an employee) is located in a disaster area (as so defined),

the period beginning on the earliest incident date specified in the declaration to which such area relates and ending on the date which is 60 days after the latest incident date so specified shall be disregarded in the same manner as a period specified under subsection (a).

(b)

Effective date

The amendment made by this section shall apply to Federally declared disasters declared after December 31, 2018.