Tax relief related to certain disasters occurring in 2021, 2022, and 2023

(a)

Definitions

For purposes of this section— (1)

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 title such period shall not be treated as ending after the date which is 30 days after the date of the enactment of this Act). (2)

Qualified disaster area

(A)

In general

The term qualified disaster area means any area with respect to which a major disaster was declared, during the period beginning after December 27, 2020, and ending on December 31, 2023, 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 on or after December 28, 2020, and on or before December 31, 2023. (B)

Exceptions

(i)

Disaster receiving relief under previous acts

Such term shall not include any area which is a qualified disaster area solely by reason of section 301 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020. (ii)

Covid–19 exception

Such term shall not include any area with respect to which such a major disaster has been so declared only by reason of COVID–19. (3)

Qualified disaster

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)

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)in the case of qualified disaster-related personal casualty losses, section 165(h)(1) of such Code shall be applied to 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)(E) 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. (c)

Treatment of certain possessions

(1)

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 section. Such amounts shall be determined by the Secretary of the Treasury based on information provided by the government of the respective possession. (2)

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 section 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. (3)

Mirror code tax system

For purposes of this subsection, 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. (4)

Treatment of payments

For purposes of section 1324 of title 31, United States Code, the payments under this subsection shall be treated in the same manner as a refund due from a credit provision referred to in subsection (b)(2) of such section. (5)

Coordination with United States income taxes

In the case of any person with respect to whom a tax benefit is taken into account with respect to the taxes imposed by any possession of the United States by reason of this subsection, the Internal Revenue Code of 1986 shall be applied with respect to such person without regard to the provisions of this subsection which provide such benefit.