[Congressional Bills 116th Congress]
[From the U.S. Government Publishing Office]
[S. 4621 Introduced in Senate (IS)]

<DOC>






116th CONGRESS
  2d Session
                                S. 4621

 To provide tax relief for persons affected by certain 2020 disasters.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 17, 2020

 Mr. Wyden (for himself, Mr. Merkley, Mrs. Feinstein, Mrs. Murray, and 
  Ms. Harris) introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To provide tax relief for persons affected by certain 2020 disasters.

    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 ``2020 Disasters Tax Relief Act''.

SEC. 2. 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, 2020, 
        and ending on the date which is 60 days after 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 the date of the 
        enactment of the Taxpayer Certainty and Disaster Tax Relief Act 
        of 2019 and on or 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 
        was determined by the President, during the period beginning on 
        January 1, 2020, and ending on the date which is 60 days after 
        the date of the enactment of this Act, 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.--
                    (A) In general.--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.
                    (B) Exception.--Such term shall not include any 
                major disaster declared as a result of the Coronavirus 
                Disease 2019 (COVID-19) pandemic.
            (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 (except that for purposes of this 
        Act such period shall not be treated as beginning before 
        January 1, 2020, or ending after the date which is 30 days 
        after the date of the enactment of this Act).

SEC. 3. 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 1 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--
                            (i) on or after the first day of the 
                        incident period of a qualified disaster and 
                        before the date which is 180 days after the 
                        date of the enactment of this Act, and
                            (ii) 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 
                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)(i), 403(b)(11), and 457(d)(1)(A) of such 
                Code and section 8433(h)(1) of title 5, United States 
                Code, and, in the case of a money purchase pension 
                plan, a qualified disaster distribution which is an in-
                service withdrawal shall be treated as meeting the 
                distribution rules of section 401(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 1 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)(i) (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 during the period beginning 
                on the date which is 180 days before the first day of 
                the incident period of such qualified disaster and 
                ending on the date which is 30 days after the last day 
                of such incident period.
            (3) Applicable period.--For purposes of this subsection, 
        the term ``applicable period'' means, in the case of a 
        principal residence in a qualified disaster area with respect 
        to any qualified disaster, the period beginning on the first 
        day of the incident period of such qualified disaster and 
        ending on the date which is 180 days after the date of the 
        enactment of this Act.
    (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 180-day period beginning on the date of the 
        enactment of this Act--
                    (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 first day of the incident 
        period 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 first day of the incident period of 
                such qualified disaster and ending on the date which is 
                180 days after the last day of such incident period, 
                such due date shall be delayed for 1 year (or, if 
                later, until the date which is 180 days after the date 
                of the enactment of this Act),
                    (B) any subsequent repayments with respect to any 
                such loan shall be appropriately adjusted to reflect 
                the delay in the due date under subparagraph (A) 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, 
                        2022, 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.

SEC. 4. 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 2020 qualified 
disaster employee retention credit shall be treated as a credit listed 
at the end of subsection (b) of such section. For purposes of this 
subsection, the 2020 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. The amount of qualified wages with respect to any 
employee which may be taken into account under this subsection by the 
employer for any taxable year shall not exceed $6,000 (reduced by the 
amount of qualified wages with respect to such employee which may be so 
taken into account for any prior taxable year).
    (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 
                during the period beginning on the first day of the 
                incident period of such qualified disaster and ending 
                on the date of the enactment of this Act, 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 with such eligible employer 
        (determined immediately before the qualified disaster referred 
        to in paragraph (1)) 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 on or after the 
        date on which the trade or business described in paragraph (1) 
        first became inoperable at the principal place of employment of 
        the employee (determined immediately before the qualified 
        disaster referred to in such paragraph) and before the earlier 
        of--
                    (A) the date on which such trade or business has 
                resumed significant operations at such principal place 
                of employment, or
                    (B) the date which is 150 days after the last day 
                of the incident period of the qualified disaster 
                referred to in paragraph (1).
        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 section, 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 
section 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.

SEC. 5. OTHER DISASTER-RELATED TAX RELIEF PROVISIONS.

    (a) 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)(D) 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 first day of 
        the incident period of the qualified disaster to which such 
        area relates, and which are attributable to such qualified 
        disaster.
    (b) 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.--For purposes of this 
        subsection, the term ``applicable taxable year'' means--
                    (A) in the case of a qualified individual other 
                than an individual described in subparagraph (B), any 
                taxable year which includes any portion of the incident 
                period of the qualified disaster to which the qualified 
                disaster area referred to in paragraph (2)(A) relates, 
                or
                    (B) in the case of a qualified individual described 
                in subparagraph (B) of paragraph (2), any taxable year 
                which includes any portion of the period described in 
                such subparagraph.
            (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).

SEC. 6. ADDITIONAL LOW-INCOME HOUSING CREDIT ALLOCATIONS.

    (a) In General.--For purposes of section 42 of the Internal Revenue 
Code of 1986, the State housing credit ceiling for any qualified State 
for calendar year 2021 shall be increased by the lesser of--
            (1) the aggregate housing credit dollar amount allocated by 
        the State housing credit agencies of such qualified State for 
        such calendar year to buildings located in qualified disaster 
        zones in such qualified State, or
            (2) 50 percent of the sum of the State housing credit 
        ceilings for such qualified State for calendar year 2020.
    (b) Allocations Treated as Made First From Additional Allocation 
for Purposes of Determining Carryover.--For purposes of determining the 
unused State housing credit ceiling for any calendar year under section 
42(h)(3)(C) of the Internal Revenue Code of 1986, any increase in the 
State housing credit ceiling under subsection (a) shall be treated as 
an amount described in clause (ii) of such section.
    (c) Definitions.--For purposes of this section--
            (1) Qualified state.--The term ``qualified State'' means 
        any State in which there is a qualified disaster zone.
            (2) Other definitions.--Terms used in this section which 
        are also used in section 42 of the Internal Revenue Code of 
        1986 shall have the same meaning in this section as in such 
        section 42.

SEC. 7. TREATMENT OF CERTAIN POSSESSIONS.

    (a) Payments to Possessions With Mirror Code Tax Systems.--The 
Secretary of the Treasury shall pay to each possession of the United 
States which has a mirror code tax system amounts equal to the loss (if 
any) 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 Other Possessions.--The Secretary of the Treasury 
shall pay to each possession of the United States which does not have a 
mirror code tax system amounts estimated by the Secretary of the 
Treasury as being equal to the aggregate benefits (if any) that would 
have been provided to residents of such possession by reason of the 
provisions of this Act if a mirror code tax system had been in effect 
in such possession. The preceding sentence shall not apply unless the 
respective possession has a plan, which has been approved by the 
Secretary of the Treasury, under which such possession will promptly 
distribute such payments to its residents.
    (c) Mirror Code Tax System.--For purposes of this section, 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.
    (d) 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.
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