II 109th CONGRESS 2d Session S. 2451 IN THE SENATE OF THE UNITED STATES March 16 (legislative day, March 15), 2006 Ms. Landrieu 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 expand certain tax benefits related to Hurricane Katrina and to Hurricane Rita.

1.

Short title

This Act may be cited as the Hurricane Rita Relief Act of 2006.

2.

Expansion of certain tax benefits for individuals affected by Hurricane Katrina to individuals affected by Hurricane Rita

(a)

Work opportunity tax credit for Hurricane Rita employees

(1)

In general

For purposes of section 51 of the Internal Revenue Code of 1986, a Hurricane Rita employee shall be treated as a member of a targeted group. (2)

Hurricane Rita employee

For purposes of this subsection, the term Hurricane Rita employee means any individual who is certified as an individual who on September 23, 2005, had a principal place of abode in that portion of the Rita GO Zone which is not part of the Gulf Opportunity Zone and who is hired during the 2-year period beginning on such date for a position the principal place of employment of which is located in the Rita GO Zone or the Gulf Opportunity Zone. (3)

Reasonable identification acceptable

In lieu of the certification requirement under subparagraph (A) of section 51(d)(12) of such Code, an individual may provide to the employer reasonable evidence that the individual is a Hurricane Rita employee, and subparagraph (B) of such section shall be applied as if such evidence were a certification described in such subparagraph. (4)

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 Rita employee— (A)section 51(c)(4) of such Code shall not apply, and (B)section 51(i)(2) of such Code shall not apply with respect to the first hire of such employee as a Hurricane Rita employee, unless such employee was an employee of the employer on September 23, 2005. (b)

Additional exemption for housing Hurricane Rita displaced individuals

(1)

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 Rita displaced individual of the taxpayer for the taxable year. (2)

Limitations

(A)

Dollar limitation

The reduction under paragraph (1) shall not exceed $2,000, reduced by the amount of the reduction under this subsection and section 302(a) of the Katrina Emergency Tax Relief Act of 2005 for all previous taxable years. (B)

Individuals taken into account only once

An individual shall not be taken into account under paragraph (1) if such individual was taken into account under such paragraph or under section 302(a) of the Katrina Emergency Tax Relief Act of 2005 by the taxpayer in any prior taxable year. (C)

Identifying information required

An individual shall not be taken into account under paragraph (1) for a taxable year unless the taxpayer identification number of such individual is included on the return of the taxpayer for such taxable year. (3)

Hurricane Rita displaced individual

For purposes of this subsection, the term Hurricane Rita displaced individual means, with respect to any taxpayer for any taxable year, a natural person if— (A)such person is not a Hurricane Katrina displaced individual (within the meaning of section 302(c) of the Katrina Emergency Tax Relief Act of 2005), (B)such person's principal place of abode on September 23, 2005, was in the Hurricane Rita disaster area, (C)(i)in the case of such an abode located in the Rita GO Zone, such person is displaced from such abode, or (ii)in the case of such an abode located outside the Rita GO Zone, such person is displaced from such abode, and (I)such abode was damaged by Hurricane Rita, or (II)such person was evacuated from such abode by reason of Hurricane Rita, and (D)such person 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.(4)

Compensation for housing

No deduction shall be allowed under this subsection if the taxpayer receives any rent or other amount (from any source) in connection with the providing of such housing. (c)

Mileage reimbursement to charitable volunteers excluded from gross income

(1)

In general

For purposes of the Internal Revenue Code of 1986, gross income of an individual for taxable years ending on or after September 23, 2005, does not include amounts received, from an organization described in section 170(c) of such Code, as reimbursement of operating expenses with respect to use of a passenger automobile for the benefit of such organization in connection with providing relief relating to Hurricane Rita during the period beginning on September 23, 2005, and ending on December 31, 2006. The preceding sentence shall apply only to the extent that the expenses which are reimbursed would be deductible under chapter 1 of such Code if section 274(d) of such Code were applied— (A)by using the standard business mileage rate in effect under section 162(a) of such Code at the time of such use, and (B)as if the individual were an employee of an organization not described in section 170(c) of such Code. (2)

Application to volunteer services only

Paragraph (1) shall not apply with respect to any expenses relating to the performance of services for compensation. (3)

No double benefit

No deduction or credit shall be allowed under any other provision of such Code with respect to the expenses excludable from gross income under paragraph (1). (d)

Exclusions of certain cancellations of indebtedness for victims of Hurricane Rita

(1)

In general

For purposes of the Internal Revenue Code of 1986, gross income shall not include any amount which (but for this subsection) would be includible in gross income by reason of the discharge (in whole or in part) of indebtedness of a natural person described in paragraph (2) by an applicable entity (as defined in section 6050P(c)(1) of such Code). (2)

Person described

A natural person is described in this paragraph if the principal place of abode of such person on September 23, 2005, was located— (A)in the Rita GO Zone, or (B)in the Hurricane Rita disaster area (but outside the Rita GO Zone) and such person suffered economic loss by reason of Hurricane Rita. (3)

Exceptions

(A)

Business indebtedness

Paragraph (1) shall not apply to any indebtedness incurred in connection with a trade or business. (B)

Real property outside Rita GO Zone

Paragraph (1) shall not apply to any discharge of indebtedness to the extent that real property constituting security for such indebtedness is located outside the Hurricane Rita disaster area. (4)

Denial of double benefit

For purposes of the Internal Revenue Code of 1986, the amount excluded from gross income under paragraph (1) shall treated in the same manner as an amount excluded under section 108(a) of such Code. (5)

Effective date

This subsection shall apply to discharges made on or after September 23, 2005, and before January 1, 2007. (e)

Definitions

For purposes of this section, the terms Rita GO Zone, Hurricane Rita disaster area, and Gulf Opportunity Zone have the meanings given such terms under section 1400M of the Internal Revenue Code of 1986.

3.

Expansion of education tax benefits and housing tax benefits to persons affected by Hurricane Rita

(a)

Education tax benefits

Section 1400O of the Internal Revenue Code of 1986 is amended by inserting or the Rita GO Zone after Gulf Opportunity Zone. (b)

Housing tax benefits

(1)

Qualified employee

Subsection (c) of section 1400P of the Internal Revenue Code of 1986 is amended to read as follows: (c)

Qualified employee

For purposes of this section, the term qualified employee means, with respect to any month— (1)any individual— (A)who had a principal residence (as defined in section 121) in the Gulf Opportunity Zone on August 28, 2005, and (B)who performs substantially all employment services— (i)in the Gulf Opportunity Zone, and (ii)for the qualified employer which furnishes lodging to such individual, and (2)any individual— (A)who had a principal residence (as defined in section 121) in the Rita GO Zone on September 23, 2005, and (B)who performs substantially all employment services— (i)in the Rita GO Zone, and (ii)for the qualified employer which furnishes lodging to such individual. . (2)

Qualified employer

Subsection (d) of section 1400P of the Internal Revenue Code of 1986 is amended to read as follows: (d)

Qualified employer

The term qualified employer means— (1)with respect to a qualified employee described in subsection (c)(1), any employer with a trade or business located in the Gulf Opportunity Zone, and (2)with respect to a qualified employee described in subsection (c)(2), any employer with a trade or business located in the Rita GO Zone. . (3)

Conforming amendments

(A)The heading for subsection (a) of section 1400P of the Internal Revenue Code of 1986 is amended by striking individual affected by Hurricane Katrina and inserting individuals affected by Hurricanes Katrina and Rita. (B)Section 1400P(b) of such Code is amended— (i)by inserting of a qualified employee after in the case of a qualified employer, (ii)by striking the Hurricane Katrina housing credit and inserting the Hurricane Katrina and Rita housing credit, (iii)by striking of a qualified employee of such employer and inserting of all qualified employees of such employer, and (iv)by striking Hurricane Katrina in the heading and inserting Hurricanes Katrina and Rita. (C)Section 38(b)(27) of such Code is amended by striking Hurricane Katrina housing credit and inserting Hurricane Katrina and Rita housing credit. (c)

Effective date

The amendments made by this section shall take effect as if included in the Gulf Opportunity Zone Act of 2005.

4.

Expansion of certain Gulf Opportunity Zone benefits to the Rita GO Zone

(a)

In general

Section 1400N is amended by adding at the end the following new subsection: (q)

Application of section to Rita GO Zone

(1)

In general

For purposes of subsections (d), (e), (f), (g), (h), and (k)— (A)the term Gulf Opportunity Zone shall include the Rita GO Zone, (B)any reference to August 28, 2005, shall be treated as a reference to September 23, 2005, with respect to that portion of the Rita GO Zone which is not a part of the Gulf Opportunity Zone, (C)any reference to August 27, 2005, shall be treated as a reference to September 22, 2005, with respect to that portion of the Rita GO Zone which is not a part of the Gulf Opportunity Zone, and (D)any reference to Hurricane Katrina shall be treated as a reference to Hurricane Rita with respect to any portion of the Gulf Opportunity Zone (after the application of subparagraph (A)) which is also a part of the Rita GO Zone. (2)

Special rule

For purposes of subsection (k)(2), in the case of any individual whose principal place of abode was located in that portion of the Rita GO Zone which is not a part of the Gulf Opportunity Zone (as defined in section 1400M(1) without regard to paragraph (1)(A)), no deduction for moving expenses under subparagraph (B)(ii) thereof shall be taken into account unless the principal place of employment of such individual is located in the Rita GO Zone. . (b)

Effective date

The amendment made by this section shall take effect as if included in the Gulf Opportunity Zone Act of 2005.