[Congressional Record Volume 157, Number 86 (Wednesday, June 15, 2011)]
[Senate]
[Page S3810]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SOUTHEASTERN DISASTER TAX RELIEF ACT
Mr. INHOFE. Mr. President, I rise today to express my support for
Senator Shelby's recently introduced bill, the Southeastern Disaster
Tax Relief Act, of which I am an original cosponsor.
As an Oklahoma native, I have seen and experienced just how
devastating severe weather can be. Since 1950, there have been
approximately 3,300 tornadoes that have killed nearly 500 people in
Oklahoma alone. Scores more have been injured. According to the
National Oceanic and Atmospheric Administration, tornadoes cause $1.1
billion of damage on average per year, and this does not account for
the unquantifiable cost of the loss of a loved one, a home, or a
business.
You may recall the F5 tornado that swept through Oklahoma on May 3,
1999. This storm alone caused $1.9 billion in damages, killed 48
people, and destroyed the town of Moore, OK. Survivors of this storm
described being trapped under the debris of their homes, the panicked
rescue effort to find neighbors, and the overwhelming sadness
accompanied by loss. When I visited Tushka, OK, on April 15 of this
year, following its devastating storms, I witnessed firsthand the same
type of devastation.
It is estimated that the damage caused by tornadoes in Oklahoma on
May 24 of this year will cost between $200 and $300 million. In
addition, the storms in Joplin, MO, may have caused an additional $3
billion in losses. Clearly, these areas are in need of assistance,
particularly since insurance payments will not remove out-of-pocket
expenses families and businesses will have to pay as they rebuild their
lives.
Under the current Tax Code, there is some relief available to
families and businesses that experience damage in hard hit areas. In
addition to being able to deduct most losses from the disaster on their
taxes, individuals who receive disaster mitigation assistance, such as
a FEMA grant, do not have to report the assistance as income.
Additionally, Congress has, in the past, passed a number of temporary
provisions to provide additional relief to victims of severe natural
disasters, such as the Heartland Relief Act, the Katrina Emergency Tax
Relief Act, and the Gulf Opportunity Zone Act.
Senator Shelby's Southeastern Disaster Tax Relief Act does the same
thing and provides targeted, temporary tax relief to folks who have
been hit by strong storms in recent months. The provisions of his bill
have been selected from a number of the previous emergency tax relief
acts enacted in past years. This is beneficial and worth mentioning
because the IRS has already drafted guidance documents for all of the
relief provisions, making it easier for taxpayers to take advantage of
the relief. We also know the provisions in this bill will actually help
people recover. The relief has worked in the past, and it will work
again today.
Any individual or business located in a county that has been declared
a major disaster area by the president is eligible for the relief
provided by this bill if those counties are eligible for either
``individual'' or ``individual and public'' assistance through FEMA.
These assistance designations are allowed only to the hardest hit
areas. In my State of Oklahoma, the qualifying counties include
Canadian, Delaware, Grady, Kingfisher, Logan, McClain, and Atoka. These
are the areas around Piedmont, Tushka, and Grove, Oklahoma. Public
assistance funds are generally made available to States and localities
to help pay for the removal of debris and to repair, replace, and
restore disaster-damaged publicly owned facilities. Individual
assistance, provided through FEMA and the SBA consists of grants and
loans made directly to individuals. These grants are need-based, and
can be issued to provide temporary housing or to help repair or replace
a family's home if their insurance coverage falls short. In the most
severe cases, additional assistance is provided.
While it is good FEMA provides this assistance, many individuals and
businesses will not qualify despite being hit hard by the storms. And
while permanent tax provisions do help individuals and businesses
account for their losses and insurance payments, they do little beyond
that to help folks get back on their feet. This underscores the need
for the Southeastern Disaster Tax Relief Act.
Under the act, individuals would be allowed, among other things, to
make early withdrawals from their tax-preferred retirement plans
without having to pay tax penalties. Current tax law discourages early
withdrawals by imposing a 10 percent tax penalty on most early
withdrawals from accounts like Roth IRAs. This is fine under normal
circumstances, but as individuals recover from disasters like this,
they should be able to tap into their own resources without being
penalized. This will likely help many families avoid going into debt or
relying on government grants to repair their homes and property.
Individuals will also be able to deduct an unlimited amount of cash
charitable contributions to nonprofit entities when the donations are
allocated toward disaster relief efforts in the affected areas. Current
policy limits the amount of income that can be deducted from charitable
giving. This bill would temporarily suspend this provision.
Businesses will be allowed to immediately expense 50 percent of the
cost of demolishing and/or cleaning up damaged property. This will
allow them to recognize their losses more quickly than current policy,
which requires them to capitalize cleanup costs into the construction
or repair of their property.
Small businesses will also be provided with a tax credit for 40
percent of wages up to $23,400 paid to employees retained while a
business is inoperable because of the storm. With unemployment hovering
around 9 percent, this provision will help struggling employers retain
and continue paying employees despite the fact that their business have
been destroyed by the storm and remaining closed for business.
Public utility companies in Oklahoma and other states will be allowed
to carry back the disaster losses to their property for 5 years. This
will allow them to quickly realize their losses from a tax perspective,
and the consequent savings will be available for them to more swiftly
rebuild their infrastructure so that service can be returned to their
customers.
Lastly, States will be allowed to float additional private activity
bonds beyond the caps presently set by statute. The amount will be
limited by the number of people whose primary residence is located in
the areas affected by the disasters.
The provisions I mentioned are only a sample of what is provided in
this bill. I must underscore, however, that this bill is highly
targeted and temporary. It is also deficit neutral. Most of the
provisions in the bill only last for the next year or so; others expire
at the end of 2013 and 2014. In total, this bill is expected to provide
over $5 billion in tax relief.
This bill has been designated an emergency--as I believe it should
be. It is targeted, temporary relief in response to an unpredictable
disaster. Usually we do not require ourselves to find immediate savings
to offset the cost of emergency provisions, but in our present age of
trillion dollar deficits, we need to offset deficits wherever possible.
Senator Shelby has offset the cost of this bill by rescinding $12
billion in unobligated appropriations that remain unexpired. This
provision applies to all Departments except the Departments of Defense
and Veterans Affairs.
In short, this bill is a necessary and commonsense tax proposal to
help tornado victims. It is also fully paid for, making it fiscally
responsible. I urge swift consideration and passage of this act.
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