The following article is provided courtesy of CCH, Inc.
When lawmakers begin their post-Thanksgiving recess conference on the Victims of Terrorism Tax Relief Bill of 2001 (HR 2884), which would provide income, estate, and payroll tax relief to victims of recent terrorist attacks, they will find that the Senate version, which was passed on November 16, contains a great deal more detail than the House's version of the bill, which was approved on September 13.
Both measures expand current income and payroll tax law pertaining to U.S. Armed Forces personnel killed in combat or civilians killed in terrorist attacks abroad so that it applies to any individual who died as a result of the terrorist attacks of September 11. However, the Senate version expands on the House-provided two-year refund of payroll taxes for self-employed victims to include payroll taxes paid by anyone killed in the attacks, including anthrax victims and those individuals who died in the 1995 bombing of the Alfred P. Murrah federal building in Oklahoma City.
Estate tax relief allows victims to shield the first $3 million in assets from federal and state taxation, and $8.5 million in assets from federal estate taxes only. The Senate version includes technical corrections to the operation of Code Sec. 2201, and makes the election to receive the special treatment optional in circumstances where treatment under the normal rules would be preferable for the taxpayer.
With respect to death and survivor benefits, the House version contains no provisions, whereas the Senate bill would not tax death benefits paid in the year of death solely because the victim died in the attacks described above if no subsequent action is needed to trigger the payments. Also, the Senate version exempts from tax disability payments made to anyone injured in the terrorist attacks, but no such language is included in the House bill. Tax on disaster relief payments is not addressed in the House bill; the Senate bill excludes from taxation disaster payments from employers and airlines, as well as federal, state and local payments.
Other tax-related issues addressed in the Senate bill, but not in the House version, include: long-term payments, deadline postponements, and airline tax relief.