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Tax Relief for 2011 Victims of Natural Disasters

August 30th

disaster reliefThis year has featured an astounding number of domestic natural disasters. In particular, the tornados that struck the southeastern states earlier this year left hundreds dead and thousands more injured or homeless.

In response to this wide-spread disaster, US Senator Jeff Sessions (R-AL), ranking member of the Senate Budget Committee, and Senator Richard Shelby (R-AL) cosponsored a bill that would provide tax relief for those affected by recent storms.

Specifically, the Southeastern Disaster Tax Relief Act of 2011 provides tax deductions for individuals affected by natural disasters. It gives permanent, uniform tax relief to all victims of federally declared disasters declared after December 21, 2010. This bill would replace temporary legislation enacted in previous years to care for victims of specific disasters.

The Disaster Tax Relief Act would be fully offset by existing undesignated federal funds, and would therefore have no impact on the US deficit.

Disaster Relief Act

Besides the promise of basic tax breaks, this bill also brings a number of other changes to the treatment of disaster victims. These changes allow more generous tax declaration and deduction conditions for those who have suffered losses as a result of a 2011 natural disaster. Included in these are:

  • Qualified disaster expenses are eligible for listing under Tax Code Section 198A.
  • A five-year net operating loss carryback is allowed.
  • More generous expensing rules apply to qualified disaster losses.
  • Rises in charitable contribution limits made to causes in support of qualified disaster relief.

 

 
 
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