[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3768 Engrossed in House (EH)]


  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
109th CONGRESS
  1st Session
                                H. R. 3768

_______________________________________________________________________

                                 AN ACT


 
   To provide emergency tax relief for persons affected by Hurricane 
                                Katrina.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Katrina Emergency Tax Relief Act of 
2005''.

SEC. 2. DESIGNATION AS EMERGENCY REQUIREMENT.

    Any provision of this Act causing an effect on receipts, budget 
authority, or outlays is designated as an emergency requirement 
pursuant to section 402 of H. Con. Res. 95 (109th Congress).

                 TITLE I--GENERAL TAX RELIEF PROVISIONS

SEC. 101. EXTENSION OF REPLACEMENT PERIOD FOR NONRECOGNITION OF GAIN.

    Clause (i) of section 1033(a)(2)(B) of the Internal Revenue Code of 
1986 shall be applied by substituting ``5 years'' for ``2 years'' with 
respect to property which--
            (1) is located in an area 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 Hurricane Katrina, 
        and
            (2) is compulsorily or involuntarily converted as a result 
        of such hurricane,
but only if substantially all of the use of the replacement property is 
located in any such area.

SEC. 102. SUSPENSION OF LIMITATIONS ON CHARITABLE CONTRIBUTIONS FOR 
              RELIEF EFFORTS RELATED TO HURRICANE KATRINA.

    (a) In General.--Except as otherwise provided in subsection (b), 
qualified disaster contributions shall not be taken into account for 
purposes of subsections (b) and (d) of section 170 of the Internal 
Revenue Code of 1986.
    (b) Treatment of Excess Contributions.--For purposes of section 170 
of such Code--
            (1) Individuals.--In the case of an individual--
                    (A) Limitation.--Any qualified disaster 
                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 paragraph (1) of section 170(b) of such Code) over 
                the amount of all other charitable contributions 
                allowed under such paragraph.
                    (B) Carryover.--If the aggregate amount of 
                qualified disaster contributions made in the 
                contribution year (within the meaning of section 
                170(d)(1) of such Code) exceeds the limitation of 
                subparagraph (A), 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.
            (2) Corporations.--In the case of a corporation--
                    (A) Limitation.--Any qualified disaster 
                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.
                    (B) Carryover.--Rules similar to the rules of 
                paragraph (1)(B) shall apply for purposes of this 
                paragraph.
    (c) Exception to Overall Limitation on Itemized Deductions.--So 
much of any deduction allowed under section 170 of such Code as does 
not exceed the qualified disaster contributions made during the taxable 
year shall not be treated as an itemized deduction for purposes of 
section 68 of such Code.
    (d) Qualified Disaster Contributions.--For purposes of this 
section, the term ``qualified disaster contribution'' means any 
charitable contribution (as defined in section 170(c) of such Code)--
            (1) made during the period beginning on August 28, 2005, 
        and ending on December 31, 2005, in cash to an organization 
        described in section 170(b)(1)(A) of such Code (other than an 
        organization described in section 509(a)(3) of such Code) for 
        relief efforts related to Hurricane Katrina, and
            (2) with respect to which the taxpayer has elected the 
        application of this section.
In the case of a partnership or S corporation, the election under 
paragraph (2) shall be made separately by each partner or shareholder.

SEC. 103. MILEAGE RATE FOR CHARITABLE PURPOSES RELATED TO HURRICANE 
              KATRINA.

    (a) Mileage Rate for Charitable Purposes Related to Hurricane 
Katrina.--Notwithstanding subsection (i) of section 170 of the Internal 
Revenue Code of 1986, in the case of the use of a vehicle described in 
subsection (f)(12)(E)(i) of such section for provision of relief 
related to Hurricane Katrina, the standard mileage rate for purposes of 
such section shall be 70 percent of the standard mileage rate for 
business purposes prescribed by the Secretary for purposes of chapter 1 
of such Code which is in effect on the date of the contribution.
    (b) Application.--Subsection (a) shall apply only with respect to 
contributions made before January 1, 2007.

SEC. 104. EXCLUSION OF CERTAIN CANCELLATIONS OF INDEBTEDNESS.

    (a) In General.--For purposes of the Internal Revenue Code of 1986, 
gross income shall not include any amount which (but for this section) 
would be includible in gross income by reason of the discharge (in 
whole or in part) of qualified nonbusiness debt of a qualified 
individual by an applicable entity (as defined in section 6050P(c)).
    (b) Qualified Nonbusiness Debt.--For purposes of this section, the 
term ``qualified nonbusiness debt'' means any indebtedness other than 
indebtedness incurred in connection with a trade or business.
    (c) Qualified Individual.--For purposes of this section, the term 
``qualified individual'' means any natural person who was a resident 
(as of August 28, 2005) of, or who owned real property (as of the date 
of such discharge) in, any 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 Hurricane Katrina.
    (d) Exception for Real Property Outside Disaster Area.--Subsection 
(a) shall not apply to any discharge of indebtedness to the extent that 
real property constituting security for such indebtedness is located 
outside of the area described in subsection (c).
    (e) Denial of Double Benefit.--The amount excluded from gross 
income under subsection (a) shall be applied to reduce the tax 
attributes of the taxpayer as provided in section 108(b) of the 
Internal Revenue Code of 1986.
    (f) Application.--This section shall not apply to discharges after 
December 31, 2006.

SEC. 105. SPECIAL RULES FOR MORTGAGE REVENUE BONDS.

    (a) In General.--In the case of financing provided with respect to 
a qualified Hurricane Katrina recovery residence, subsection (d) of 
section 143 of the Internal Revenue Code of 1986 shall be applied as if 
such residence were a targeted area residence.
    (b) Qualified Hurricane Katrina Recovery Residence.--For purposes 
of this section, the term ``qualified Hurricane Katrina recovery 
residence'' means any residence if such residence is located in an 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 Hurricane Katrina.
    (c) Application.--Subsection (a) shall not apply to financing 
provided after December 31, 2007.

SEC. 106. SUSPENSION OF CERTAIN LIMITATIONS ON PERSONAL CASUALTY 
              LOSSES.

    Paragraphs (1) and (2)(A) of section 165(h) of the Internal Revenue 
Code of 1986 shall not apply to losses described in section 165(c)(3) 
of such Code which are attributable to Hurricane Katrina. In the case 
of any other losses, section 165(h)(2)(A) of such Code shall be applied 
without regard to the losses referred to in the preceding sentence.

SEC. 107. ADDITIONAL EXEMPTION FOR HOUSING HURRICANE KATRINA DISPLACED 
              INDIVIDUALS.

    (a) In General.--In the case of taxable years of a natural person 
beginning in 2005 and 2006, for purposes of the Internal Revenue Code 
of 1986, taxable income shall be reduced by $500 for each Hurricane 
Katrina displaced individual of the taxpayer for the taxable year.
    (b) Limitations.--
            (1) Dollar limitation.--The reduction under subsection (a) 
        shall not exceed $2,000, reduced by the amount of the reduction 
        under this section for all previous taxable years.
            (2) Individuals taken into account only once.--An 
        individual shall not be taken into account under subsection (a) 
        if such individual was taken into account under such subsection 
        by the taxpayer in any prior taxable year.
    (c) Hurricane Katrina Displaced Individual.--For purposes of this 
subsection, the term ``Hurricane Katrina displaced individual'' means, 
with respect to any taxpayer for any taxable year, a natural person 
who--
            (1) was (as of August 28, 2005) a resident of any 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 Hurricane Katrina,
            (2) is displaced from the person's residence located in the 
        area described in paragraph (1), and
            (3) is provided housing free of charge by the taxpayer in 
        the principal residence of the taxpayer for a period of 60 
        consecutive days which ends in such taxable year.
Such term shall not include the spouse or any dependent of the 
taxpayer.

SEC. 108. SPECIAL RULE FOR DETERMINING EARNED INCOME.

    (a) In General.--In the case of a qualified individual, if the 
earned income of the taxpayer for the taxable year of such taxpayer 
which includes August 28, 2005, is less than the earned income which is 
attributable to 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--
            (1) such earned income for the preceding taxable year, for
            (2) such earned income for the taxable year which includes 
        August 28, 2005.
    (b) Qualified Individual.--For purposes of this section, the term 
``qualified individual'' means any individual who was (as of August 28, 
2005) a resident of any 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 Hurricane Katrina.
    (c) Earned Income.--For purposes of this section, the term ``earned 
income'' has the meaning given such term under section 32(c) of such 
Code.
    (d) Special Rules.--
            (1) Application to joint returns.--For purpose of 
        subsection (a), in the case of a joint return for a taxable 
        year which includes August 28, 2005,
                    (A) such subsection shall apply if either spouse is 
                a qualified individual,
                    (B) the earned income which is attributable to the 
                taxpayer for the preceding taxable year shall be the 
                sum of the earned income which is attributable to each 
                spouse for such preceding taxable year, and
                    (C) the substitution described in such subsection 
                shall apply only with respect to earned income which is 
                attributable to a spouse who is a qualified individual.
            (2) Uniform application of election.--Any election made 
        under subsection (a) shall apply with respect to both section 
        24(d) and section 32 of such Code.
            (3) Errors treated as mathematical error.--For purposes of 
        section 6213 of such Code, an incorrect use on a return of 
        earned income pursuant to subsection (a) shall be treated as a 
        mathematical or clerical error.
            (4) No effect on determination of gross income.--For 
        purposes of the Internal Revenue Code of 1986, gross income 
        shall be determined without regard to any substitution under 
        subsection (a).

SEC. 109. SECRETARIAL AUTHORITY TO MAKE ADJUSTMENTS REGARDING TAXPAYER 
              AND DEPENDENCY STATUS.

    With respect to taxable years beginning in 2005 or 2006, the 
Secretary of the Treasury, or his delegate, may make such adjustments 
in the application of the internal revenue laws as may be necessary to 
ensure that taxpayers do not lose dependency exemptions or child 
credits or experience a change of filing status by reason of temporary 
relocations after Hurricane Katrina or by reason of the receipt of 
hurricane relief. Any adjustments made under the preceding sentence 
shall ensure that an individual is not taken into account by more than 
one taxpayer with respect to the same tax benefit.

SEC. 110. WORK OPPORTUNITY TAX CREDIT FOR HURRICANE KATRINA EMPLOYEES.

    (a) In General.--For purposes of section 51 of the Internal Revenue 
Code of 1986, a Hurricane Katrina employee shall be treated as a member 
of a targeted group.
    (b) Hurricane Katrina Employee.--For purposes of this section, the 
term ``Hurricane Katrina employee'' means any individual who, on August 
28, 2005, had a principal place of abode in a Hurricane Katrina 
disaster area.
    (c) Special Rules for Determining Credit.--For purposes of applying 
subpart F of part IV of subchapter A of chapter 1 of such Code to wages 
paid or incurred to any Hurricane Katrina employee--
            (1) section 51(c)(4) of such Code shall not apply, and
            (2) except in the case of an employee of the employer 
        (within the meaning of section 51 of such Code) on August 28, 
        2005, or an employee initially hired after such date, section 
        51(i)(2) of such Code shall not apply.
    (d) Application of Section.--This section shall apply only to wages 
(within the meaning on section 51(c) of such Code) paid or incurred to 
any individual who--
            (1) is being hired for a position the principal place of 
        employment of which is located in a Hurricane Katrina disaster 
        area, and
            (2) who begins work for the employer during the 2-year 
        period beginning on August 29, 2005.
    (e) Hurricane Katrina Disaster Area.--For purposes of this section, 
the term ``Hurricane Katrina disaster area'' means any 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 
Hurricane Katrina.

 TITLE II--PENALTY FREE USE OF RETIREMENT FUNDS IN THE CASE OF NATURAL 
                               DISASTERS

SEC. 201. PENALTY FREE WITHDRAWALS FROM RETIREMENT PLANS UPON FEDERAL 
              DECLARATION OF NATURAL DISASTER.

    (a) In General.--Paragraph (2) of section 72(t) of the Internal 
Revenue Code of 1986 (relating to 10-percent additional tax on early 
distributions from qualified retirement plans) is amended by adding at 
the end the following new subparagraph:
                    ``(G) Distributions from retirement plans upon 
                federal declaration of natural disaster.--
                            ``(i) In general.--Any qualified disaster-
                        relief distribution.
                            ``(ii) Aggregate limitation.--The aggregate 
                        amount of payments or distributions received by 
                        an individual which may be treated as qualified 
                        disaster-relief 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-relief 
                                distributions with respect to such 
                                individual for all prior taxable years.
                            ``(iii) Amount distributed may be repaid.--
                                    ``(I) In general.--Any individual 
                                who receives a qualified disaster-
                                relief distribution may, at any time 
                                during the 3-year period beginning on 
                                the day after the date on which such 
                                distribution was made, make one or more 
                                contributions in an aggregate amount 
                                not to exceed the amount of such 
                                distribution to an eligible retirement 
                                plan (as defined in section 
                                402(c)(8)(B)) 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), as the case may be.
                                    ``(II) Treatment of repayments for 
                                distributions from eligible retirement 
                                plans other than iras.--For purposes of 
                                this title, if a contribution is made 
                                pursuant to subclause (I) with respect 
                                to a qualified disaster-relief 
                                distribution from an eligible 
                                retirement plan (as so defined) 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-relief distribution 
                                in an eligible rollover distribution 
                                (as defined in section 402(c)(4)) and 
                                as having transferred the amount to the 
                                eligible retirement plan in a direct 
                                trustee to trustee transfer within 60 
                                days of the distribution.
                                    ``(III) Treatment of repayments for 
                                distributions from iras.--For purposes 
                                of this title, if a contribution is 
                                made pursuant to subclause (I) with 
                                respect to a qualified disaster-relief 
                                distribution from an individual 
                                retirement plan, then, to the extent of 
                                the amount of the contribution, the 
                                qualified disaster-relief distribution 
                                shall be treated as a distribution 
                                described in section 408(d)(3) and as 
                                having been transferred to the eligible 
                                retirement plan in a direct trustee to 
                                trustee transfer within 60 days of the 
                                distribution.
                                    ``(IV) Application to governmental 
                                section 457 plans.--In determining 
                                whether any distribution is a qualified 
                                disaster-relief distribution for 
                                purposes of this clause, an eligible 
                                deferred compensation plan (as defined 
                                in section 457(b)) maintained by an 
                                employer described in section 
                                457(e)(1)(A) shall be treated as a 
                                qualified retirement plan.
                            ``(iv) Qualified disaster-relief 
                        distribution.--For purposes of this 
                        subparagraph, the term `qualified disaster-
                        relief distribution' means any distribution--
                                    ``(I) to an individual who has 
                                sustained a loss as a result of a major 
                                disaster declared under section 401 of 
                                the Robert T. Stafford Disaster Relief 
                                and Emergency Assistance Act by reason 
                                of Hurricane Katrina and who has a 
                                principal place of abode immediately 
                                before the declaration in a qualified 
                                disaster area, and
                                    ``(II) which is made during the 1-
                                year period beginning on the date such 
                                declaration is made.
                            ``(v) Qualified disaster area.--For 
                        purposes of this subparagraph, the term 
                        `qualified disaster area' means any 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 Hurricane 
                        Katrina.''.
    (b) Exemption of Distributions From Trustee to Trustee Transfer and 
Withholding Rules.--Paragraph (4) of section 402(c) of such Code 
(relating to eligible rollover distribution) is amended by striking 
``and'' at the end of subparagraph (B), by striking the period at the 
end of subparagraph (C) and inserting ``, and'', and by inserting at 
the end the following new subparagraph:
                    ``(D) any qualified disaster-relief distribution 
                (within the meaning of section 72(t)(2)(G)).''.
    (c) Conforming Amendments.--
            (1) Section 401(k)(2)(B)(i) of such Code is amended by 
        striking ``or'' at the end of subclause (III), by striking 
        ``and'' at the end of subclause (IV) and inserting ``or'', and 
        by inserting after subclause (IV) the following new subclause:
                                    ``(V) the date on which a period 
                                referred to in section 
                                72(t)(2)(G)(iii)(II) begins (but only 
                                to the extent provided in section 
                                72(t)(2)(G)), and''.
            (2) Section 403(b)(7)(A)(ii) of such Code is amended by 
        inserting ``sustains a loss as a result of a major disaster 
        declared under section 401 of the Robert T. Stafford Disaster 
        Relief and Emergency Assistance Act by reason of Hurricane 
        Katrina (but only to the extent provided in section 
        72(t)(2)(G)),'' before ``or''.
            (3) Section 403(b)(11) of such Code is amended by striking 
        ``or'' at the end of subparagraph (A), by striking the period 
        at the end of subparagraph (B) and inserting ``, or'', and by 
        inserting after subparagraph (B) the following new 
        subparagraph:
                    ``(C) for distributions to which section 
                72(t)(2)(G) applies.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to distributions received after August 28, 2005.

SEC. 202. INCOME AVERAGING FOR DISASTER-RELIEF DISTRIBUTIONS RELATED TO 
              HURRICANE KATRINA.

    (a) In General.--In the case of any qualified disaster-relief 
distribution (within the meaning of section 72(t)(2)(G) of the Internal 
Revenue Code of 1986) from a qualified retirement plan (as defined in 
section 4974(c) of such Code) to a qualified individual, unless the 
taxpayer elects not to have this section 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 Rules.--
            (1) Application to governmental section 457 plans.--In 
        determining whether any distribution is a qualified disaster-
        relief distribution (as so defined) for purposes of this 
        section, an eligible deferred compensation plan (as defined in 
        section 457(b) of such Code) maintained by an employer 
        described in section 457(e)(1)(A) of such Code shall be treated 
        as a qualified retirement plan (as so defined)
            (2) Certain rules to apply.--Rules similar to the rules of 
        subparagraph (E) of section 408A(d)(3) of such Code shall apply 
        for purposes of this section.
    (c) Qualified Individual.--For purposes of this section, the term 
``qualified individual'' means an individual who has sustained a loss 
as a result of the major disaster declared under section 401 of the 
Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 
U.S.C. 5170) by reason of Hurricane Katrina and who has a principal 
place of abode immediately before the declaration in a Hurricane 
Katrina disaster area.
    (d) Hurricane Katrina Disaster Area.--For purposes of this section, 
the term ``Hurricane Katrina disaster area'' means any 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 
Hurricane Katrina.

SEC. 203. RECONTRIBUTIONS OF WITHDRAWALS FOR HOME PURCHASES CANCELLED 
              DUE TO HURRICANE KATRINA.

    (a) Recontributions.--
            (1) In general.--Any individual who received a qualified 
        distribution may, at any time during the 6-month period 
        beginning on the day after the disaster declaration date, 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), 408(d)(3), or 457(e)(16) of such Code, as the case 
        may be.
            (2) Treatment of repayments.--
                    (A) Treatment of repayments for distributions from 
                eligible retirement plans other than iras.--For 
                purposes of the Internal Revenue Code of 1986, if a 
                contribution is made pursuant to paragraph (1) with 
                respect to a qualified distribution from an eligible 
                retirement plan (as so defined) other than an 
                individual retirement plan (as defined in section 
                7701(a)(37) of such Code), then the taxpayer shall, to 
                the extent of the amount of the contribution, be 
                treated as having received the qualified 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.
                    (B) Treatment of repayments for distributions from 
                iras.--For purposes of the Internal Revenue Code of 
                1986, if a contribution is made pursuant to paragraph 
                (1) with respect to a qualified distribution from an 
                individual retirement plan (as so defined), then, to 
                the extent of the amount of the contribution, the 
                qualified 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 (as so defined) in a direct trustee to 
                trustee transfer within 60 days of the distribution.
    (b) Definitions.--For purposes of this section--
            (1) Qualified distribution.--The term ``qualified 
        distribution'' means any distribution--
                    (A) described in section 401(k)(2)(B)(i)(IV), 
                403(b)(7)(A)(ii), 403(b)(11)(B), 457(d)(1)(A)(iii), or 
                72(t)(2)(F) of the Internal Revenue Code of 1986,
                    (B) received after February 28, 2005, and before 
                August 29, 2005, and
                    (C) which was to be used to purchase or construct a 
                principal residence in a Hurricane Katrina disaster 
                area, but which was not so purchased or constructed.
            (2) Disaster declaration date.--The term ``disaster 
        declaration date'' means the date on which the President 
        designated the area as a Hurricane Katrina disaster area.
            (3) Hurricane katrina disaster area.--The term ``Hurricane 
        Katrina disaster area'' means any 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 Hurricane Katrina.

SEC. 204. LOANS FROM QUALIFIED PLANS IN CONNECTION WITH HURRICANE 
              KATRINA.

    (a) 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 (as defined in section 202(c)) made after the date of 
enactment of this Act and before the date which is 1 year after the 
disaster declaration date (as defined in section 203(b)(2))--
            (1) clause (i) of section 72(p)(2)(A) of such Code shall be 
        applied by substituting ``$100,000'' for ``$50,000'', and
            (2) 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''.
    (b) Delay of Repayment.--In the case of a qualified individual (as 
defined in section 202(c)) with an outstanding loan on or after August 
26, 2005, from a qualified employer plan (as defined in section 
72(p)(4) of the Internal Revenue Code of 1986)--
            (1) 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 after August 29, 
        2005, and ending before August 30, 2006, such due date shall be 
        delayed for 1 year,
            (2) 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
            (3) 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, 
        such period shall be disregarded.

SEC. 205. PROVISIONS RELATING TO PLAN AMENDMENTS.

    (a) In General.--If this section applies to any plan or contract 
amendment--
            (1) such plan or contract shall be treated as being 
        operated in accordance with the terms of the plan during the 
        period described in subsection (b)(2)(A), and
            (2) except as provided by the Secretary of the Treasury, 
        such plan shall not fail to meet the requirements of section 
        411(d)(6) of the Internal Revenue Code of 1986 and section 
        204(g) of the Employee Retirement Income Security Act of 1974 
        by reason of such amendment.
    (b) Amendments to Which Section Applies.--
            (1) In general.--This section shall apply to any amendment 
        to any plan or annuity contract which is made--
                    (A) pursuant to any amendment made by this title, 
                or pursuant to any regulation issued by the Secretary 
                of the Treasury or the Secretary of Labor under this 
                title, and
                    (B) on or before the last day of the first plan 
                year beginning on or after January 1, 2007, or such 
                later date as the Secretary of the Treasury may 
                prescribe.
        In the case of a governmental plan (as defined in section 
        414(d) of the Internal Revenue Code of 1986), subparagraph (B) 
        shall be applied by substituting the date which is 2 years 
        after the date otherwise applied under subparagraph (B).
            (2) Conditions.--This section shall not apply to any 
        amendment unless--
                    (A) during the period--
                            (i) beginning on the date the legislative 
                        or regulatory amendment described in paragraph 
                        (1)(A) takes effect (or in the case of a plan 
                        or contract amendment not required by such 
                        legislative or regulatory amendment, the 
                        effective date specified by the plan), and
                            (ii) ending on the date described in 
                        paragraph (1)(B) (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
                    (B) such plan or contract amendment applies 
                retroactively for such period.

    TITLE III--EXTENSION OF CERTAIN PROVISIONS TO FLORIDA AND OTHER 
                             AFFECTED AREAS

SEC. 301. EXTENSION OF CERTAIN PROVISIONS TO FLORIDA AND OTHER AFFECTED 
              AREAS.

    (a) In General.--The following provisions shall be applied as if 
they did not include the phrase ``individual or individual and 
public'':
            (1) Section 101 of this Act (relating to extension of 
        replacement period for nonrecognition of gain).
            (2) Section 104 of this Act (relating to exclusion of 
        certain cancellations of indebtedness), but only if the 
        discharge is on account of Hurricane Katrina.
            (3) Section 105 of this Act (relating to special rules for 
        mortgage revenue bonds), but only with respect to residences 
        damaged as a result of Hurricane Katrina.
            (4) Section 106 of this Act (relating to suspension of 
        certain limitations on personal casualty losses).
            (5) Section 107 of this Act (relating to additional 
        exemption for housing Hurricane Katrina displaced individuals).
            (6) Sections 108 and 109 of this Act (relating to special 
        rule for certain family related benefits), but only with 
        respect to individuals dislocated from their residence by 
        reason of Hurricane Katrina.
            (7) Title II of this Act (relating to penalty free use of 
        retirement funds in the case of natural disasters) and section 
        72(t)(2)(G) of the Internal Revenue Code of 1986 (as added by 
        section 201 of this Act).
    (b) Clarification of Scope of Provisions Relating to Charitable 
Contributions.--The provisions of sections 102 and 103 shall apply to 
relief efforts related to Hurricane Katrina whether or not such efforts 
are carried out in an area directly impacted by Hurricane Katrina.

            Passed the House of Representatives September 15, 2005.

            Attest:

                                                                 Clerk.
109th CONGRESS

  1st Session

                               H. R. 3768

_______________________________________________________________________

                                 AN ACT

   To provide emergency tax relief for persons affected by Hurricane 
                                Katrina.