[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[S. 1991 Introduced in Senate (IS)]

113th CONGRESS
  2d Session
                                S. 1991

   To amend the Internal Revenue Code of 1986 to allow individuals a 
deduction for amounts contributed to disaster savings accounts to help 
defray the cost of preparing their homes to withstand a disaster and to 
     repair or replace property damaged or destroyed in a disaster.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            February 4, 2014

  Mr. Inhofe 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 allow individuals a 
deduction for amounts contributed to disaster savings accounts to help 
defray the cost of preparing their homes to withstand a disaster and to 
     repair or replace property damaged or destroyed in a disaster.

    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 ``Disaster Savings Accounts Act of 
2014''.

SEC. 2. DEDUCTION FOR CONTRIBUTIONS TO DISASTER SAVINGS ACCOUNTS.

    (a) In General.--Part VII of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to additional itemized 
deductions for individuals) is amended by redesignating section 224 as 
section 225 and by inserting after section 223 the following new 
section:

``SEC. 224. DISASTER SAVINGS ACCOUNTS.

    ``(a) Deduction Allowed.--In the case of an eligible individual, 
there shall be allowed as a deduction for the taxable year an amount 
equal to the aggregate amount paid during such taxable year by or on 
behalf of such individual to a disaster savings account of such 
individual.
    ``(b) Limitation.--
            ``(1) In general.--The amount allowed as a deduction under 
        subsection (a) to an individual for the taxable year shall not 
        exceed $5,000.
            ``(2) Partial year of eligibility.--In the case of an 
        individual who is an eligible individual for only a portion of 
        the taxable year, the limitation under paragraph (1) shall be 
        the same proportion of $5,000 as such portion bears to the 
        entire taxable year.
    ``(c) Eligible Individual.--For purposes of this section, the term 
`eligible individual' means any individual if such individual occupied 
any residence in the United States at any time during the taxable year.
    ``(d) Disaster Savings Account.--For purposes of this section--
            ``(1) In general.--The term `disaster savings account' 
        means a trust created or organized in the United States as a 
        disaster savings account exclusively for the purpose of paying 
        the qualified disaster expenses of the account beneficiary, but 
        only if the written governing instrument creating the trust 
        meets the following requirements:
                    ``(A) Except in the case of a rollover contribution 
                described in subsection (f)(5), no contribution will be 
                accepted--
                            ``(i) unless it is in cash, or
                            ``(ii) to the extent such contribution, 
                        when added to previous contributions to the 
                        trust for the calendar year, exceeds the dollar 
                        limitation in effect under subsection (b).
                    ``(B) The trustee is a bank (as defined in section 
                408(n)), an insurance company (as defined in section 
                816), or another person who demonstrates to the 
                satisfaction of the Secretary that the manner in which 
                such person will administer the trust will be 
                consistent with the requirements of this section.
                    ``(C) No part of the trust assets will be invested 
                in life insurance contracts.
                    ``(D) The assets of the trust will not be 
                commingled with other property except in a common trust 
                fund or common investment fund.
                    ``(E) The interest of an individual in the balance 
                in his account is nonforfeitable.
            ``(2) Qualified disaster expenses.--The term `qualified 
        disaster expenses' means--
                    ``(A) disaster mitigation expenses, and
                    ``(B) disaster recovery expenses.
            ``(3) Disaster mitigation expenses.--The term `disaster 
        mitigation expenses' means expenses for any of the following 
        with respect to the residence referred to in subsection (c):
                    ``(A) Tornado safe rooms manufactured or 
                constructed in accordance with FEMA 320 or FEMA 361 
                guidance or tornado shelters manufactured or 
                constructed in accordance with the National Storm 
                Shelter/International Code Council 500 standard.
                    ``(B) Opening protection, including impact and wind 
                resistant windows, exterior doors, and garage doors.
                    ``(C) Reinforcement of roof-to-wall and floor-to-
                wall connections for wind or seismic activity.
                    ``(D) Roof covering for impact, fire, or high wind 
                resistance.
                    ``(E) Cripple and shear walls to resist seismic 
                activity.
                    ``(F) Flood resistant building materials.
                    ``(G) Elevating structures and utilities above base 
                flood elevation.
                    ``(H) Fire resistant exterior wall assemblies/
                systems.
                    ``(I) Lightning protection systems.
                    ``(J) Whole home standby generators.
                    ``(K) Any activity specified by the Secretary as 
                appropriate to mitigate the risks of future hazards 
                (including earthquake, flood, hail, hurricane, 
                lightning, power outage, tornado, and wildfire) and 
                other natural disasters.
            ``(4) Disaster recovery expenses.--The term `disaster 
        recovery expenses' means with respect to the residence referred 
        to in subsection (c) any expense incurred to replace or repair 
        disaster-related uninsured personal casualty personal losses 
        totaling $3,000 or greater.
            ``(5) Disaster-related uninsured personal casualty loss.--
        The term `disaster-related uninsured personal casualty loss' 
        means a personal casualty loss (as defined in section 
        165(h)(4)(B), determined without regard to the second sentence 
        thereof) attributable to a State or federally declared disaster 
        for which a deduction is allowable under section 165 (without 
        regard to subsection (h)(1)).
            ``(6) Federally declared disaster.--The term `federally 
        declared disaster' has the meaning given such term by section 
        165(h)(3)(C).
            ``(7) Account beneficiary.--The term `account beneficiary' 
        means the individual on whose behalf the disaster savings 
        account was established.
    ``(e) Treatment of Account.--
            ``(1) In general.--A disaster savings account is exempt 
        from taxation under this subtitle unless such account has 
        ceased to be a disaster savings account. Notwithstanding the 
        preceding sentence, any such account is subject to the taxes 
        imposed by section 511 (relating to imposition of tax on 
        unrelated business income of charitable, etc. organizations).
            ``(2) Account terminations.--Rules similar to the rules of 
        paragraphs (2) and (4) of section 408(e) shall apply to 
        disaster savings accounts, and any amount treated as 
        distributed under such rules shall be treated as not used to 
        pay disaster mitigation expenses.
    ``(f) Tax Treatment of Distributions.--
            ``(1) Amounts used for disaster mitigation expenses.--Any 
        amount paid or distributed out of a disaster savings account 
        which is used exclusively to pay qualified disaster expenses of 
        any account beneficiary shall not be includible in gross 
        income.
            ``(2) Inclusion of amounts not used for disaster mitigation 
        expenses.--Any amount paid or distributed out of a disaster 
        savings account which is not used exclusively to pay the 
        qualified disaster expenses of the account beneficiary shall be 
        included in the gross income of such beneficiary.
            ``(3) Excess contributions returned before due date of 
        return.--
                    ``(A) In general.--If any excess contribution is 
                contributed for a taxable year to any disaster savings 
                account of an individual, paragraph (2) shall not apply 
                to distributions from the disaster savings accounts of 
                such individual (to the extent such distributions do 
                not exceed the aggregate excess contributions to all 
                such accounts of such individual for such year) if--
                            ``(i) such distribution is received by the 
                        individual on or before the last day prescribed 
                        by law (including extensions of time) for 
                        filing such individual's return for such 
                        taxable year, and
                            ``(ii) such distribution is accompanied by 
                        the amount of net income attributable to such 
                        excess contribution.
                Any net income described in clause (ii) shall be 
                included in the gross income of the individual for the 
                taxable year in which it is received.
                    ``(B) Excess contribution.--For purposes of 
                subparagraph (A), the term `excess contribution' means 
                any contribution (other than a rollover contribution 
                described in paragraph (5)) which is not deductible 
                under this section.
            ``(4) Additional tax on distributions not used for disaster 
        mitigation expenses.--
                    ``(A) In general.--The tax imposed by this chapter 
                on the account beneficiary for any taxable year in 
                which there is a payment or distribution from a 
                disaster savings account of such beneficiary which is 
                includible in gross income under paragraph (2) shall be 
                increased by 20 percent of the amount which is so 
                includible.
                    ``(B) Exception for disability or death.--
                Subparagraph (A) shall not apply if the payment or 
                distribution is made after the account beneficiary 
                becomes disabled within the meaning of section 72(m)(7) 
                or dies.
            ``(5) Rollover contribution.--An amount is described in 
        this paragraph as a rollover contribution if it meets the 
        requirements of subparagraphs (A) and (B).
                    ``(A) In general.--Paragraph (2) shall not apply to 
                any amount paid or distributed from a disaster savings 
                account to the account beneficiary to the extent the 
                amount received is paid into a disaster savings account 
                for the benefit of such beneficiary not later than the 
                60th day after the day on which the beneficiary 
                receives the payment or distribution.
                    ``(B) Limitation.--This paragraph shall not apply 
                to any amount described in subparagraph (A) received by 
                an individual from a disaster savings account if, at 
                any time during the 1-year period ending on the day of 
                such receipt, such individual received any other amount 
                described in subparagraph (A) from a disaster savings 
                account which was not includible in the individual's 
                gross income because of the application of this 
                paragraph.
    ``(g) Cost-of-Living Adjustment.--
            ``(1) In general.--In the case of a taxable year beginning 
        after 2015, the $5,000 amount in subsection (b) shall be 
        increased by an amount equal to--
                    ``(A) such dollar amount, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for the calendar year in which 
                such taxable year begins determined by substituting 
                `calendar year 2014' for `calendar year 1992' in 
                subparagraph (B) thereof.
            ``(2) Rounding.--If any increase under paragraph (1) is not 
        a multiple of $50, such increase shall be rounded to the 
        nearest multiple of $50.
    ``(h) Special Rules.--
            ``(1) Denial of deduction to dependents.--No deduction 
        shall be allowed under this section to any individual with 
        respect to whom a deduction under section 151 is allowable to 
        another taxpayer for a taxable year beginning in the calendar 
        year in which such individual's taxable year begins.
            ``(2) Taxable year must be full taxable year.--Except in 
        the case of a taxable year closed by reason of the death of the 
        taxpayer, no deduction shall be allowed under this section in 
        the case of a taxable year covering a period of less than 12 
        months.
            ``(3) Certain rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this section:
                    ``(A) Section 219(d)(2) (relating to no deduction 
                for rollovers).
                    ``(B) Section 219(f)(3) (relating to time when 
                contributions deemed made).
                    ``(C) Section 219(f)(5) (relating to employer 
                payments).
                    ``(D) Section 408(g) (relating to community 
                property laws).
                    ``(E) Section 408(h) (relating to custodial 
                accounts).
                    ``(F) Section 224(f)(7) (relating to transfer of 
                account incident to divorce).
                    ``(G) Section 224(f)(8) (relating to treatment 
                after death of account beneficiary).
            ``(4) Coordination with casualty loss deduction.--No 
        deduction shall be allowed under section 165 for a loss for 
        which a disaster recovery expense payment is made from a 
        disaster savings account.
    ``(i) Reports.--The Secretary may require the trustee of a disaster 
savings account to make such reports regarding such account to the 
Secretary and to the account beneficiary with respect to contributions, 
distributions, the return of excess contributions, and such other 
matters as the Secretary determines appropriate.''.
    (b) Deduction Allowed Whether or Not Individual Itemizes Other 
Deductions.--Subsection (a) of section 62 of such Code is amended by 
inserting after paragraph (21) the following new paragraph:
            ``(22) Disaster savings accounts.--The deduction allowed by 
        section 224.''.
    (c) Tax on Excess Contributions.--Section 4973 of such Code 
(relating to tax on excess contributions to certain tax-favored 
accounts and annuities) is amended--
            (1) by striking ``or'' at the end of subsection (a)(4), by 
        inserting ``or'' at the end of subsection (a)(5), and by 
        inserting after subsection (a)(5) the following new paragraph:
            ``(6) a disaster savings account (within the meaning of 
        section 224(d)),'', and
            (2) by adding at the end the following new subsection:
    ``(h) Excess Contributions to Disaster Savings Accounts.--For 
purposes of this section, in the case of disaster savings accounts 
(within the meaning of section 224(d)), the term `excess contributions' 
means the sum of--
            ``(1) the aggregate amount contributed for the taxable year 
        to the accounts (other than a rollover contribution described 
        in section 224(f)(5)) which is not allowable as a deduction 
        under section 224 for such year, and
            ``(2) the amount determined under this subsection for the 
        preceding taxable year, reduced by the sum of--
                    ``(A) the distributions out of the accounts which 
                were included in gross income under section 224(f)(2), 
                and
                    ``(B) the excess (if any) of--
                            ``(i) the maximum amount allowable as a 
                        deduction under section 224(b) for the taxable 
                        year, over
                            ``(ii) the amount contributed to the 
                        accounts for the taxable year.
                For purposes of this subsection, any contribution which 
                is distributed out of the disaster savings account in a 
                distribution to which section 224(f)(3) applies shall 
                be treated as an amount not contributed.''.
    (d) Failure To Provide Reports on Disaster Savings Accounts.--
Paragraph (2) of section 6693(a) of such Code (relating to reports) is 
amended by redesignating subparagraphs (D) and (E) as subparagraphs (E) 
and (F), respectively, and by inserting after subparagraph (C) the 
following new subparagraph:
                    ``(D) section 224(i) (relating to disaster savings 
                accounts),''.
    (e) Clerical Amendment.--The table of sections for part VII of 
subchapter B of chapter 1 of such Code is amended by striking the last 
item and inserting the following:

``Sec. 224. Disaster savings accounts.
``Sec. 225. Cross reference.''.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.
                                 <all>