Section 1 Short title
This Act may be cited as the “Hurricane Michael Tax Relief Act”.
Hurricane Michael Tax Relief Act
A BILL
To provide tax relief for the victims of Hurricane Michael, and for other purposes.
Sec. 2 Hurricane Michael disaster zone and disaster area
Hurricane Michael disaster zone— For purposes of this Act, the term “Hurricane Michael disaster zone” means that portion of the Hurricane Michael disaster area determined by the President to warrant individual or individual and public assistance from the Federal Government under such Act by reason of Hurricane Michael.
Hurricane Michael disaster area— The term “Hurricane Michael disaster area” means an area with respect to which a major disaster has been declared by the President before October 19, 2018, under section 401 of such Act by reason of Hurricane Michael.
Sec. 3 Special disaster-related rules for use of retirement funds
Tax-Favored withdrawals from retirement plans—
In general— Section 72(t) of the Internal Revenue Code of 1986 shall not apply to any qualified hurricane distribution.
Aggregate dollar limitation—
In general— For purposes of this subsection, the aggregate amount of distributions received by an individual which may be treated as qualified hurricane distributions for any taxable year shall not exceed the excess (if any) of—
$100,000; over
the aggregate amounts treated as qualified hurricane distributions received by such individual for all prior taxable years.
Treatment of plan distributions— If a distribution to an individual would (without regard to subparagraph (A)) be a qualified hurricane 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 hurricane 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.
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.
Amount distributed may be repaid—
In general— Any individual who receives a qualified hurricane distribution may, at any time during the 3-year period beginning on the day after the date on which such distribution was received, make one 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.
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 hurricane 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 hurricane 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.
Treatment of repayments for 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 hurricane 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 hurricane 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.
Definitions— For purposes of this subsection—
Qualified hurricane distribution— Except as provided in paragraph (2), the term “qualified hurricane distribution” means any distribution from an eligible retirement plan made on or after October 9, 2018, and before January 1, 2020, to an individual whose principal place of abode on October 9, 2018, is located in the Hurricane Michael disaster area and who has sustained an economic loss by reason of Hurricane Michael.
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.
Income inclusion spread over 3-year period—
In general— In the case of any qualified hurricane 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.
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.
Special rules—
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 hurricane distributions shall not be treated as eligible rollover distributions.
Qualified hurricane distributions treated as meeting plan distribution requirements— For purposes the Internal Revenue Code of 1986, a qualified hurricane distribution shall be treated as meeting the requirements of sections 401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) of such Code.
Recontributions of withdrawals for home purchases—
Recontributions—
In general— Any individual who received a qualified distribution may, during the period beginning on October 9, 2018, and ending on March 31, 2019, make one 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.
Treatment of repayments— Rules similar to the rules of subparagraphs (B) and (C) of subsection (a)(3) shall apply for purposes of this subsection.
Qualified distribution— For purposes of this subsection, the term “qualified distribution” means any distribution—
described in section 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (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;
received after February 28, 2018, and before October 19, 2018; and
which was to be used to purchase or construct a principal residence in the Hurricane Michael disaster area, but which was not so purchased or constructed on account of Hurricane Michael.
Loans from qualified plans—
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 period beginning on the date of the enactment of this Act and ending on December 31, 2019—
clause (i) of section 72(p)(2)(A) of such Code shall be applied by substituting “$100,000” for “$50,000”; and
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”.
Delay of repayment— In the case of a qualified individual with an outstanding loan on or after October 9, 2018, from a qualified employer plan (as defined in section 72(p)(4) of the Internal Revenue Code of 1986)—
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 October 9, 2018, and ending on December 31, 2019, such due date shall be delayed for 1 year;
any subsequent repayments with respect to any such loan shall be appropriately adjusted to reflect the delay in the due date under paragraph (1) and any interest accruing during such delay; and
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) shall be disregarded.
Qualified Hurricane Michael individual— For purposes of this subsection, the term “qualified Hurricane Michael individual” means an individual whose principal place of abode on October 9, 2018, is located in the Hurricane Michael disaster area and who has sustained an economic loss by reason of Hurricane Michael.
Provisions relating to plan amendments—
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).
Amendments to which subsection applies—
In general— This subsection shall apply to any amendment to any plan or annuity contract which is made—
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
on or before the last day of the first plan year beginning on or after January 1, 2020, or such later date as the Secretary may prescribe.
Conditions— This subsection shall not apply to any amendment unless—
during the period—
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
ending on the date described in subparagraph (A)(ii) (or, if earlier, the date the plan or contract amendment is adopted),
such plan or contract amendment applies retroactively for such period.
Sec. 4 Employee retention credit for employers affected by Hurricane Michael
In general— For purposes of section 38 of the Internal Revenue Code of 1986, in the case of an eligible employer, the Hurricane Michael employee retention credit shall be treated as a credit listed in subsection (b) of such section. For purposes of this section, the Hurricane Michael 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. For purposes of the preceding sentence, the amount of qualified wages which may be taken into account with respect to any individual shall not exceed $6,000.
Definitions— For purposes of this section—
Eligible employer— The term “eligible employer” means any employer—
which conducted an active trade or business on October 9, 2018, in the Hurricane Michael disaster zone; and
with respect to whom the trade or business described in subparagraph (A) is inoperable on any day after October 9, 2018, and before January 1, 2019, as a result of damage sustained by reason of Hurricane Michael.
Eligible employee— The term “eligible employee” means with respect to an eligible employer an employee whose principal place of employment on October 9, 2018, with such eligible employer was in the Hurricane Michael disaster zone.
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 on any day after October 9, 2018, and before February 1, 2019, which occurs during the period—
beginning on the date on which the trade or business described in paragraph (1) first became inoperable at the principal place of employment of the employee immediately before Hurricane Michael; and
ending on the date on which such trade or business has resumed significant operations at such principal place of employment.
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.
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 Additional disaster-related tax relief provisions
Temporary suspension of limitations on charitable contributions—
In general— Except as otherwise provided in paragraph (2), subsection (b) of section 170 of the Internal Revenue Code of 1986 shall not apply to qualified contributions and such contributions shall not be taken into account for purposes of applying subsections (b) and (d) of such section to other contributions.
Treatment of excess contributions— For purposes of section 170 of the Internal Revenue Code of 1986—
Individuals— In the case of an individual—
Limitation— Any qualified contribution shall be allowed only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer’s contribution base (as defined in subparagraph (H) of section 170(b)(1) of such Code) over the amount of all other charitable contributions allowed under section 170(b)(1) of such Code.
Carryover— If the aggregate amount of qualified contributions made in the contribution year (within the meaning of section 170(d)(1) of such Code) exceeds the limitation of clause (i), such excess shall be added to the excess described in the portion of subparagraph (A) of such section which precedes clause (i) thereof for purposes of applying such section.
Corporations— In the case of a corporation—
Limitation— Any qualified contribution shall be allowed only to the extent that the aggregate of such contributions does not exceed the excess of the taxpayer’s taxable income (as determined under paragraph (2) of section 170(b) of such Code) over the amount of all other charitable contributions allowed under such paragraph.
Carryover— Rules similar to the rules of subparagraph (A)(ii) shall apply for purposes of this subparagraph.
Qualified contributions—
In general— For purposes of this subsection, the term “qualified contribution” means any charitable contribution (as defined in section 170(c) of the Internal Revenue Code of 1986) if—
such contribution—
is paid during the period beginning on October 9, 2018, and ending on December 31, 2018, in cash to an organization described in section 170(b)(1)(A) of such Code; and
is made for relief efforts in the Hurricane Michael disaster area;
the taxpayer obtains from such organization contemporaneous written acknowledgment (within the meaning of section 170(f)(8) of such Code) that such contribution was used (or is to be used) for relief efforts described in clause (i)(II); and
the taxpayer has elected the application of this subsection with respect to such contribution.
Exception— Such term shall not include a contribution by a donor if the contribution is—
to an organization described in section 509(a)(3) of the Internal Revenue Code of 1986; or
for the establishment of a new, or maintenance of an existing, donor advised fund (as defined in section 4966(d)(2) of such Code).
Application of election to partnerships and S corporations— In the case of a partnership or S corporation, the election under subparagraph (A)(iii) shall be made separately by each partner or shareholder.
Special rules for qualified disaster-Related personal casualty losses—
In general— If an individual has a net disaster loss for any taxable year—
the amount determined under section 165(h)(2)(A)(ii) of the Internal Revenue Code of 1986 shall be equal to the sum of—
such net disaster loss; and
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;
section 165(h)(1) of such Code shall be applied by substituting “$500” for “$500 ($100 for taxable years beginning after December 31, 2009)”;
the standard deduction determined under section 63(c) of such Code shall be increased by the net disaster loss; and
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.
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).
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 the Hurricane Michael disaster area on or after October 9, 2018, and which are attributable to Hurricane Michael.
Special rule for determining earned income—
In general— In the case of a qualified Hurricane Michael individual, if the earned income of the taxpayer for the taxable year which includes October 9, 2018, 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—
such earned income for the preceding taxable year; for
such earned income for the taxable year which includes October 9, 2018.
Qualified Hurricane Michael individual— For purposes of this subsection, the term “qualified Hurricane Michael individual” means any individual whose principal place of abode on October 9, 2018, was located—
in the Hurricane Michael disaster zone; or
in the Hurricane Michael disaster area (but outside the Hurricane Michael disaster zone) and such individual was displaced from such principal place of abode by reason of Hurricane Michael.
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.
Special rules—
Application to joint returns— For purposes of paragraph (1), in the case of a joint return for a taxable year which includes October 9, 2018—
such paragraph shall apply if either spouse is a qualified individual; and
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.
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.
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.
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).