II 110th CONGRESS 2d Session S. 3427 IN THE SENATE OF THE UNITED STATES August 1, 2008 Mr. Wicker (for himself, Mr. Cochran, Mr. Martinez, and Mr. Vitter) 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 provide a credit for hurricane mitigation expenditures, and to provide a credit for the increased insurance premiums of certain homeowners as a result of hurricane events.

1.

Short title

This Act may be cited as the Costal Homeowners Assistance Act.

2.

Nonrefundable personal credit for hurricane mitigation property

(a)

In general

Subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 25D the following new section:

25E.

Hurricane mitigation property

(a)

Allowance of credit

In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by this chapter an amount equal to 25 percent of the qualified hurricane mitigation property expenditures made by the taxpayer during the taxable year. (b)

Limitations

(1)

Maximum credit

The credit allowed under subsection (a) shall not exceed the excess (if any) of $5,000 over the aggregate credits allowed under this section with respect to such taxpayer for all prior taxable years. (2)

Limitation based on amount of tax

In the case of a taxable year to which section 26(a)(2) does not apply, the credit allowed under subsection (a) for any taxable year shall not exceed the excess of— (A)the sum of the regular tax liability (as defined in section 26(b)) plus the tax imposed by section 55, over (B)the sum of the credits allowable under this subpart (other than this section and section 23) for the taxable year. (c)

Eligible individual

For purposes of this section, the term eligible individual means any taxpayer whose principal residence is a qualified dwelling unit located in— (1)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 1 or more hurricanes during 2004 or 2005, or (2)a county located in a State which borders the Atlantic Ocean or the Gulf of Mexico. (d)

Qualified hurricane mitigation property expenditures

For purposes of this section— (1)

In general

The term qualified hurricane mitigation property expenditures means an expenditure for property— (A)to improve the strength of a roof deck attachment, (B)to create a secondary water barrier to prevent water intrusion, (C)to improve the durability of a roof covering, (D)to brace gable-end walls, (E)to reinforce the connection between a roof and supporting wall, (F)to protect openings from penetration by windborne debris, (G)to protect exterior doors and garages, or (H)to achieve such other mitigation purposes as prescribed in regulations by the Secretary after consultation with the Administrator of the Federal Emergency Management Agency, in the principal residence of the taxpayer.(2)

Limitation

An expenditure shall be taken into account in determining the qualified hurricane mitigation property expenditures made by the taxpayer during the taxable year only if the onsite preparation, assembly, or original installation of the property with respect to which such expenditure is made has been completed in a manner that is deemed to be adequate by a State-certified inspector. (3)

Labor costs

Expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the property described in paragraph (1) shall be taken into account in determining the qualified hurricane mitigation property expenditures made by the taxpayer during the taxable year. (4)

Inspection costs

Expenditures for inspection costs properly allocable to the inspection of the preparation, assembly, or installation of the property described in paragraph (1) shall be taken into account in determining the qualified hurricane mitigation property expenditures made by the taxpayer during the taxable year. (e)

Other definitions

For purposes of this section— (1)

Principal residence

The term principal residence has the same meaning as when used in section 121. (2)

Qualified dwelling unit

The term qualified dwelling unit means a dwelling unit that is assessed at a value that is less than $1,000,000 by the locality in which such dwelling unit is located and with respect to the taxable year for which the credit described in subsection (a) is allowed.

. (b)

Conforming amendments

(1)Section 24(b)(3)(B) of the Internal Revenue Code of 1986 is amended by striking and 25B and inserting , 25B, and 25E. (2)Section 25(e)(1)(C)(ii) of such Code is amended by inserting 25E, after 25D,. (3)Section 25B(g)(2) of such Code is amended by striking section 23 and inserting sections 23 and 25E. (4)Section 25D(c)(2) of such Code is amended by striking and 25B and inserting 25B, and 25E. (5)Section 26(a)(1) of such Code is amended by striking and 25B and inserting 25B, and 25E. (6)Section 904(i) of such Code is amended by striking and 25B and inserting 25B, and 25E. (7)Section 1400C(d)(2) of such Code is amended by striking and 25D and inserting 25D, and 25E. (c)

Clerical amendment

The table of sections for subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after the item relating to section 25D the following new item: Sec. 25E. Hurricane mitigation property. . (d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2007.

3.

Credit for home insurance premium increases

(a)

Allowance of credit

In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by chapter 1 of the Internal Revenue Code of 1986 for the first taxable year after the date of the enactment of this section an amount equal to 50 percent of the qualified homeowners insurance premium increases. (b)

Maximum credit

The credit allowed under subsection (a) shall not exceed $5,000. (c)

Eligible individual

For purposes of this section, the term eligible individual means any taxpayer— (1)whose principal residence, as of the last day of the taxable year, is a qualified dwelling unit located in— (A)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 1 or more hurricanes during 2004 or 2005, or (B)a county— (i)located in a State which borders the Atlantic Ocean or the Gulf of Mexico, and (ii)which is determined by the Secretary to have experienced a higher than average increase in premiums for homeowners insurance during 2004, 2005, or 2006 due to hurricane risk, and (2)whose principal residence, as of the applicable date, was located— (A)in an area or county described in paragraph (1), and (B)within 100 miles of such taxpayer's principal residence as of the last day of the taxable year. (d)

Qualified homeowners insurance premium increase

For purposes of this section— (1)

In general

The term qualified homeowners insurance premium increase means, with respect to any eligible individual, the amount equal to the qualifying percentage of the premium for homeowners insurance in effect on the third policy anniversary date following the applicable date. (2)

Qualifying percentage

The term qualifying percentage means the amount equal to the excess (expressed in percentage points) of— (A)the increase in the premium for homeowners insurance of the eligible individual between the date of the last policy anniversary before the applicable date and the third policy anniversary date following the applicable date, over (B)a 100 percent increase in the premium for such homeowners insurance between the same dates. (e)

Other definitions

For purposes of this section— (1)

Applicable date

The term applicable date means— (A)with respect to any individual whose principal residence is located in an area described in subsection (c)(1)(A), the day before the determination described in such subsection, and (B)with respect to any individual whose principal residence is located in a county described in subsection (c)(1)(B), September 1, 2005. (2)

Homeowners insurance

The term homeowners insurance means any insurance covering a principal residence. Such term includes coverage of a principal residence with respect to wind damage through a State-run wind pool. (3)

Principal residence

The term principal residence has the same meaning as when used in section 121 of the Internal Revenue Code of 1986. (4)

Qualified dwelling unit

The term qualified dwelling unit means a dwelling unit that is assessed at a value that is less than $1,000,000 by the locality in which such dwelling unit is located and with respect to the taxable year for which the credit described in subsection (a) is allowed. (f)

Credit treated as personal nonrefundable credit

(1)

In general

The credit allowed under this section shall be treated as a credit allowed under subpart A of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986. (2)

Limitation based on amount of tax

In the case of a taxable year to which section 26(a)(2) of such Code does not apply, the credit allowed under this section for any taxable year shall not exceed the excess of— (A)the sum of the regular tax liability (as defined in section 26(b) of such Code) plus the tax imposed by section 55 of such Code, over (B)the sum of the credits allowable under such subpart A (other than this section and section 23 of such Code) for the taxable year. (3)

Carryforward of unused credit

If the credit allowable under subsection (a) exceeds the limitation imposed under section 26(a) of the Internal Revenue Code of 1986 for the taxable year reduced by the sum of the credits allowable under subpart A of part IV of subchapter A of chapter 1 of such Code, or, if applicable, the limitation under paragraph (2), such excess shall be carried to the succeeding taxable year and allowable as a credit under such subpart for such succeeding taxable year.