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AICPA Recommends 10 Tax Reform Provisions Related to Disaster Assistance

Apr 15th 2015
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In a comment letter sent to the Senate Finance Committee Tax Reform Working Group on Community Development and Infrastructure on April 14, the American Institute of CPAs (AICPA) offered several recommendations for permanent tax provisions related to disaster relief.

The AICPA is pushing Congress to consider the following 10 legislative proposals as permanent tax provisions that are triggered when a taxpayer resides, or has a principal place of business located, in a Federal Emergency Management Agency “Disaster Declaration” area for which individual disaster assistance is available.

  1. Waive individual casualty loss limitations.
  2. Extend net operating loss carryback to five years.
  3. Increase Section 179 expense limits.
  4. Increase property replacement period to five years.
  5. Waive the penalty for early retirement withdrawal.
  6. Allow a housing exemption for displaced individuals.
  7. Allow discharge of indebtedness.
  8. Allow the Work Opportunity Tax Credit.
  9. Permit the use of prior year’s income to calculate the Earned Income Tax Credit, Child Tax Credit, and Premium Tax Credit.
  10. Increase the medical expense deduction.

“The AICPA urges Congress to enact tax legislation that permanently provides meaningful and timely relief that is automatically triggered by a declaration of a federal disaster rather than providing for such relief via individual bills following a disaster,” Troy Lewis, CPA, CGMA, chair of the AICPA Tax Executive Committee, wrote in the letter. “Permanent relief will provide disaster victims with certainty, fairness, and the ability to promptly receive the aid they need after a natural disaster, while reducing the administrative burdens on disaster victims and the IRS.”

The Tax Reform Working Group on Community Development and Infrastructure is one of five bipartisan groups launched by Senate Finance Committee Chairman Orrin Hatch (R-UT) and Sen. Ron Wyden (D-OR), the top Democrat on the panel, at the start of the year to spur congressional comprehensive tax reform efforts.

The working groups will analyze current tax law and examine policy trade-offs and available reform options within the group’s designated topic areas. Each group will be co-chaired by one Republican and one Democrat member. The co-chairs for the Community Development and Infrastructure working group are Sen. Dean Heller (R-NV) and Sen. Michael Bennet (D-CO).

Related article:

AICPA Makes Suggestions on How Business Income Tax Can be Simplified


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