[Congressional Record (Bound Edition), Volume 151 (2005), Part 5]
[House]
[Pages 6494-6496]
[From the U.S. Government Publishing Office, www.gpo.gov]




      PROPER TAX TREATMENT OF CERTAIN DISASTER MITIGATION PAYMENTS

  Mr. FOLEY. Mr. Speaker, I ask unanimous consent to take from the 
Speaker's table the bill (H.R. 1134) to amend the Internal Revenue Code 
of 1986 to provide for the proper tax treatment of certain disaster 
mitigation payments, with a Senate amendment thereto, and concur in the 
Senate amendment.
  The Clerk read the title of the bill.
  The Clerk read the Senate amendment, as follows:

       Senate Amendment:
       Strike out all after the enacting clause and insert:

     SEC. 1. PROPER TAX TREATMENT OF CERTAIN DISASTER MITIGATION 
                   PAYMENTS.

       (a) Qualified Disaster Mitigation Payments Excluded From 
     Gross Income.--
       (1) In general.--Section 139 of the Internal Revenue Code 
     of 1986 (relating to disaster relief payments) is amended by 
     adding at the end the following new subsections:
       ``(g) Qualified Disaster Mitigation Payments.--
       ``(1) In general.--Gross income shall not include any 
     amount received as a qualified disaster mitigation payment.
       ``(2) Qualified disaster mitigation payment defined.--For 
     purposes of this section, the term `qualified disaster 
     mitigation payment' means any amount which is paid pursuant 
     to the Robert T. Stafford Disaster Relief and Emergency 
     Assistance Act (as in effect on the date of the enactment of 
     this subsection) or the National Flood Insurance Act (as in 
     effect on such date) to or for the benefit of the owner of 
     any property for hazard mitigation with respect to such 
     property. Such term shall not include any amount received for 
     the sale or disposition of any property.
       ``(3) No increase in basis.--Notwithstanding any other 
     provision of this subtitle, no increase in the basis or 
     adjusted basis of any property shall result from any amount 
     excluded under this subsection with respect to such property.
       ``(h) Denial of Double Benefit.--Notwithstanding any other 
     provision of this subtitle, no deduction or credit shall be 
     allowed (to the person for whose benefit a qualified disaster 
     relief payment or qualified disaster mitigation payment is 
     made) for, or by reason of, any expenditure to the extent of 
     the amount excluded under this section with respect to such 
     expenditure.''.
       (2) Conforming amendments.--
       (A) Subsection (d) of section 139 of such Code is amended 
     by striking ``a qualified disaster relief payment'' and 
     inserting ``qualified disaster relief payments and qualified 
     disaster mitigation payments''.

[[Page 6495]]

       (B) Subsection (e) of section 139 of such Code is amended 
     by striking ``and (f)'' and inserting ``, (f), and (g)''.
       (b) Certain Dispositions of Property Under Hazard 
     Mitigation Programs Treated as Involuntary Conversions.--
     Section 1033 of such Code (relating to involuntary 
     conversions) is amended by redesignating subsection (k) as 
     subsection (l) and by inserting after subsection (j) the 
     following new subsection:
       ``(k) Sales or Exchanges Under Certain Hazard Mitigation 
     Programs.--For purposes of this subtitle, if property is sold 
     or otherwise transferred to the Federal Government, a State 
     or local government, or an Indian tribal government to 
     implement hazard mitigation under the Robert T. Stafford 
     Disaster Relief and Emergency Assistance Act (as in effect on 
     the date of the enactment of this subsection) or the National 
     Flood Insurance Act (as in effect on such date), such sale or 
     transfer shall be treated as an involuntary conversion to 
     which this section applies.''.
       (c) Effective Date.--
       (1) Qualified disaster mitigation payments.--The amendments 
     made by subsection (a) shall apply to amounts received 
     before, on, or after the date of the enactment of this Act.
       (2) Dispositions of property under hazard mitigation 
     programs.--The amendments made by subsection (b) shall apply 
     to sales or other dispositions before, on, or after the date 
     of the enactment of this Act.

  Mr. FOLEY (during the reading). Mr. Speaker, I ask unanimous consent 
that the Senate amendment be considered as read and printed in the 
Record.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Florida?
  There was no objection.
  The SPEAKER pro tempore. Is there objection to the original request 
of the gentleman from Florida?
  Mr. CARDIN. Mr. Speaker, reserving the right to object, I do so not 
for the purposes of objecting but to give the gentleman from Florida 
(Mr. Foley) an opportunity to explain the legislation that is extremely 
important to people who have suffered disaster as a result of 
hurricanes in our country.
  Mr. FOLEY. Mr. Speaker, will the gentleman yield?
  Mr. CARDIN. I yield to the gentleman from Florida.
  Mr. FOLEY. Mr. Speaker, I appreciate the gentleman for yielding and 
certainly for his help in supporting this important measure.
  Mr. Speaker, I am pleased to call up H.R. 1134, as amended by the 
other body, and with the bill's many supporters urge its adoption.
  I remind my colleagues that the House passed this bill by voice vote 
1 month ago. It was a bipartisan effort. We worked with the 
administration to develop a bill that makes disaster mitigation grants 
tax free. The bill also extended tax-free treatment to outstanding 
grants, as the administration's budget clearly provided for.
  The amendment gilds the lily by making the relief in outstanding 
grants more explicit. During the past month, there has been some 
discussion in the other body of raising taxes and of adding unrelated 
tax breaks. I am pleased and thrilled that neither of those ideas was 
added to the bill and that this amendment is acceptable.
  As I said when the bill was considered on this floor on March 14, 
H.R. 1134 will make disaster mitigation grants attractive to those we 
want to help avoid loss of life and property. These grants have saved 
Americans $2.9 billion in property losses during the past 15 years. 
Passing this bill today will clarify a difficult tax issue just in 
time, and I must underline just in time, for our April 15 filing and 
help those Americans who are even now struggling with their tax 
returns. And I hope all here will join me in passing the bill.
  Of course, I thank the chairman of the Committee on Ways and Means, 
the gentleman from California (Mr. Thomas), and the ranking member, the 
gentleman from New York (Mr. Rangel), for their quick consideration of 
this important bill and, of course, the gentleman from Maryland (Mr. 
Cardin), a member of the committee, for his excellent work on this as 
well.
  Mr. COLE of Oklahoma. Mr. Speaker, will the gentleman yield?
  Mr. CARDIN. Further reserving the right to object, I yield to the 
gentleman from Oklahoma.
  Mr. COLE of Oklahoma. Mr. Speaker, I thank the gentleman for 
yielding. It is very gracious of him.
  Mr. Speaker, I come from a part of the country, Oklahoma, where 
disasters are not uncommon. Sometimes they are the awful man-made 
disasters of the Oklahoma City Bombing, something we will talk about 
next week, but more frequently they are the disasters associated with 
tornados.
  In my home community in 1999 we had an F-5 tornado that destroyed in 
my community and the adjacent community 6,000 homes and killed 40 
people. Four years later, another tornado, traveling almost in the 
identical path, destroyed another 500 homes and injured many people.
  Each time we got superb help from the Federal Government and from 
FEMA, both in the immediate disaster and in the aftermath, to mitigate 
the consequences of future events of this type; and we were very, very 
grateful for that help as Americans.
  It came then as an enormous surprise to the constituents that I 
represent years later that this help turned into potentially a taxable 
event. That is, there was talk at the Internal Revenue Service of going 
back, taking the grant and actually levying a tax on them years after 
they have been given.
  I want to commend the gentleman from Florida (Mr. Foley), who has had 
similar circumstances dealing with hurricanes in his home State, for 
working with our delegation in Oklahoma on a bipartisan basis, the 
gentleman from Oklahoma (Mr. Istook), the gentleman from Oklahoma (Mr. 
Lucas), the gentleman from Oklahoma (Mr. Sullivan), the gentleman from 
Oklahoma (Mr. Boren) and myself and for working across the aisle with 
our good friends who have this problem in common.
  On this floor we sometimes do have partisan disagreements, but when 
the good of the country is at stake, it is amazing how often we do come 
together. And certainly we come together regardless of party to help 
people that have been hurt through no fault of their own in the course 
of disaster and to help them prepare so that those disasters never 
threaten their well-being again.
  So I want to thank again my friend, the gentleman from Florida (Mr. 
Foley), for his outstanding work. I commend our colleagues in the 
Senate for working with him in getting this bill done just in time. 
Literally, I had a couple of town meetings last week when we were on 
break where I had constituents come and ask who had benefited from 
these mitigation grants, would the taxation problem be taken care of? 
And at that time I could not actually assure that it would be.
  A number of them filed extensions rather than turn their taxes in. 
They were not sure what their liability was going to be. If it were not 
for the action of the gentleman from Florida (Mr. Foley), if it were 
not for the action of the people on both sides of the aisle, if it were 
not for the action of the other body, they would potentially be facing 
a tax bill that they never anticipated.
  Again, I want to thank the gentleman from Florida (Mr. Foley) for his 
extraordinary work in this regard. I want to tell him if he wants to 
run for office next time, come to Oklahoma. We remember our friends. 
And we appreciate very much his remarkable efforts.
  I thank so much my good friend, the gentleman from Maryland (Mr. 
Cardin).
  Mr. FOLEY. Mr. Speaker, will the gentleman yield?
  Mr. CARDIN. Further reserving the right to object, I yield to the 
gentleman from Florida.
  Mr. FOLEY. Mr. Speaker, I certainly appreciate that invitation, but I 
am quite proud of serving Florida.
  I think it is important to thank the gentleman from Louisiana (Mr. 
Jindal) has been a prime sponsor, as have been Democrats and 
Republicans. That is one of the joys of the process when we actually 
get something done with bipartisan support.
  I want to thank the staff on the Committee on Ways and Means but 
specifically Elizabeth Nicholson from my staff, my deputy chief of 
staff who has labored very long, hard hours on trying to get this to 
fruition. We are here on the floor and I am very excited and pleased 
that we will be able to provide

[[Page 6496]]

this relief for our taxpayers. And, of course, the gentleman from 
Oklahoma (Mr. Cole) clearly stated without their help and the entire 
delegation that this effort would have been for naught.

                              {time}  1630

  So we appreciate all involvement and all support.
  Mr. CARDIN. Mr. Speaker, further reserving the right to object, I 
want to just conclude by acknowledging the work of the gentleman from 
Florida (Mr. Foley). He really does deserve the credit for being 
persistent to get this legislation passed prior to April 15.
  I also want to thank the gentleman from California (Mr. Thomas), our 
chairman, and the gentleman from New York (Mr. Rangel), our ranking 
member, for arranging this process.
  It has been a pleasure to work with the gentleman. As the gentleman 
knows the problems we have had in Maryland with Hurricane Isabel and 
the hardship that that caused, I got to see firsthand the damage and 
devastation to families in my own State. This bill will help. It has 
been my pleasure to join my colleague from Florida in sponsoring and 
supporting this legislation.
  Mr. Speaker, I withdraw my reservation of objection.
  The SPEAKER pro tempore (Mr. Fortenberry). Is there objection to the 
original request of the gentleman from Florida?
  There was no objection.
  A motion to reconsider was laid on the table.

                          ____________________