Disaster Tax Relief Act of 2020

I 116TH CONGRESS 2D SESSION H. R. 8440 To provide disaster tax relief. IN THE HOUSE OF REPRESENTATIVES SEPTEMBER 29, 2020 Mr. THOMPSON of California (for himself, Mr. BLUMENAUER, and Ms. FINKENAUER) introduced the following bill; which was referred to the Committee on Ways and Means, and in addition to the Committee on Small Business, for a period to be subsequently determined by the Speak- er, in each case for consideration of such provisions as fall within the ju- risdiction of the committee concerned A BILL To provide disaster tax relief. Be it enacted by the Senate and House of Representa- 1 tives of the United States of America in Congress assembled, 2 SECTION 1. SHORT TITLE; TABLE OF CONTENTS. 3 (a) SHORT TITLE.—This Act may be cited as the 4 ‘‘Disaster Tax Relief Act of 2020’’. 5 (b) TABLE OF CONTENTS.—The table of contents for 6 this Act is as follows: 7 Sec. 1. Short title; table of contents. Sec. 2. Definitions. Sec. 3. Special disaster-related rules for use of retirement funds. Sec. 4. Employee retention credit for employers affected by qualified disasters. VerDate Sep 11 2014 20:35 Oct 24, 2020 Jkt 019200 PO 00000 Frm 00001 Fmt 6652 Sfmt 6211 E:\BILLS\H8440.IH H8440 pbinns on DSKJLVW7X2PROD with BILLS 2 •HR 8440 IH Sec. 5. Other disaster-related tax relief provisions. Sec. 6. Treatment of certain possessions. SEC. 2. DEFINITIONS. 1 For purposes of this Act— 2 (1) QUALIFIED DISASTER AREA.— 3 (A) IN GENERAL.—The term ‘‘qualified 4 disaster area’’ means any area with respect to 5 which a major disaster was declared, during the 6 period beginning on December 28, 2019, and 7 ending on the date which is 60 days after the 8 date of the enactment of this Act, by the Presi- 9 dent under section 401 of the Robert T. Staf- 10 ford Disaster Relief and Emergency Assistance 11 Act if the incident period of the disaster with 12 respect to which such declaration is made be- 13 gins on or before the date of the enactment of 14 this Act. 15 (B) COVID–19 EXCEPTION.—Such term 16 shall not include any area with respect to which 17 such a major disaster has been so declared only 18 by reason of COVID–19. 19 (2) QUALIFIED DISASTER ZONE.—The term 20 ‘‘qualified disaster zone’’ means that portion of any 21 qualified disaster area which was determined by the 22 President, during the period beginning on December 23 28, 2019, and ending on the date which is 60 days 24 VerDate Sep 11 2014 20:35 Oct 24, 2020 Jkt 019200 PO 00000 Frm 00002 Fmt 6652 Sfmt 6201 E:\BILLS\H8440.IH H8440 pbinns on DSKJLVW7X2PROD with BILLS 3 •HR 8440 IH after the date of the enactment of this Act, to war- 1 rant individual or individual and public assistance 2 from the Federal Government under the Robert T. 3 Stafford Disaster Relief and Emergency Assistance 4 Act by reason of the qualified disaster with respect 5 to such disaster area. 6 (3) QUALIFIED DISASTER.—The term ‘‘quali- 7 fied disaster’’ means, with respect to any qualified 8 disaster area, the disaster by reason of which a 9 major disaster was declared with respect to such 10 area. 11 (4) INCIDENT PERIOD.—The term ‘‘incident pe- 12 riod’’ means, with respect to any qualified disaster, 13 the period specified by the Federal Emergency Man- 14 agement Agency as the period during which such 15 disaster occurred (except that for purposes of this 16 Act such period shall not be treated as beginning be- 17 fore December 28, 2019, or ending after the date 18 which is 30 days after the date of the enactment of 19 this Act). 20 SEC. 3. SPECIAL DISASTER-RELATED RULES FOR USE OF 21 RETIREMENT FUNDS. 22 (a) TAX-FAVORED WITHDRAWALS FROM RETIRE- 23 MENT PLANS.— 24 VerDate Sep 11 2014 20:35 Oct 24, 2020 Jkt 019200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H8440.IH H8440 pbinns on DSKJLVW7X2PROD with BILLS 4 •HR 8440 IH (1) IN GENERAL.—Section 72(t) of the Internal 1 Revenue Code of 1986 shall not apply to any quali- 2 fied disaster distribution. 3 (2) AGGREGATE DOLLAR LIMITATION.— 4 (A) IN GENERAL.—For purposes of this 5 subsection, the aggregate amount of distribu- 6 tions received by an individual which may be 7 treated as qualified disaster distributions for 8 any taxable year shall not exceed the excess (if 9 any) of— 10 (i) $100,000, over 11 (ii) the aggregate amounts treated as 12 qualified disaster distributions received by 13 such individual for all prior taxable years. 14 (B) TREATMENT OF PLAN DISTRIBU- 15 TIONS.—If a distribution to an individual would 16 (without regard to subparagraph (A)) be a 17 qualified disaster distribution, a plan shall not 18 be treated as violating any requirement of the 19 Internal Revenue Code of 1986 merely because 20 the plan treats such distribution as a qualified 21 disaster distribution, unless the aggregate 22 amount of such distributions from all plans 23 maintained by the employer (and any member 24 VerDate Sep 11 2014 20:35 Oct 24, 2020 Jkt 019200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H8440.IH H8440 pbinns on DSKJLVW7X2PROD with BILLS 5 •HR 8440 IH of any controlled group which includes the em- 1 ployer) to such individual exceeds $100,000. 2 (C) CONTROLLED GROUP.—For purposes 3 of subparagraph (B), the term ‘‘controlled 4 group’’ means any group treated as a single 5 employer under subsection (b), (c), (m), or (o) 6 of section 414 of the Internal Revenue Code of 7 1986. 8 (D) SPECIAL RULE FOR INDIVIDUALS AF- 9 FECTED BY MORE THAN ONE DISASTER.—The 10 limitation of subparagraph (A) shall be applied 11 separately with respect to distributions made 12 with respect to each qualified disaster. 13 (3) AMOUNT DISTRIBUTED MAY BE REPAID.— 14 (A) IN GENERAL.—Any individual who re- 15 ceives a qualified disaster distribution may, at 16 any time during the 3-year period beginning on 17 the day after the date on which such distribu- 18 tion was received, make 1 or more contributions 19 in an aggregate amount not to exceed the 20 amount of such distribution to an eligible retire- 21 ment plan of which such individual is a bene- 22 ficiary and to which a rollover contribution of 23 such distribution could be made under section 24 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 25 VerDate Sep 11 2014 20:35 Oct 24, 2020 Jkt 019200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H8440.IH H8440 pbinns on DSKJLVW7X2PROD with BILLS 6 •HR 8440 IH 457(e)(16), of the Internal Revenue Code of 1 1986, as the case may be. 2 (B) TREATMENT OF REPAYMENTS OF DIS- 3 TRIBUTIONS FROM ELIGIBLE RETIREMENT 4 PLANS OTHER THAN IRAS.—For purposes of 5 the Internal Revenue Code of 1986, if a con- 6 tribution is made pursuant to subparagraph (A) 7 with respect to a qualified disaster distribution 8 from an eligible retirement plan other than an 9 individual retirement plan, then the taxpayer 10 shall, to the extent of the amount of the con- 11 tribution, be treated as having received the 12 qualified disaster distribution in an eligible roll- 13 over distribution (as defined in section 14 402(c)(4) of such Code) and as having trans- 15 ferred the amount to the eligible retirement 16 plan in a direct trustee to trustee transfer with- 17 in 60 days of the distribution. 18 (C) TREATMENT OF REPAYMENTS OF DIS- 19 TRIBUTIONS FROM IRAS.—For purposes of the 20 Internal Revenue Code of 1986, if a contribu- 21 tion is made pursuant to subparagraph (A) 22 with respect to a qualified disaster distribution 23 from an individual retirement plan (as defined 24 by section 7701(a)(37) of such Code), then, to 25 VerDate Sep 11 2014 20:35 Oct 24, 2020 Jkt 019200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H8440.IH H8440 pbinns on DSKJLVW7X2PROD with BILLS 7 •HR 8440 IH the extent of the amount of the contribution, 1 the qualified disaster distribution shall be treat- 2 ed as a distribution described in section 3 408(d)(3) of such Code and as having been 4 transferred to the eligible retirement plan in a 5 direct trustee to trustee transfer within 60 days 6 of the distribution. 7 (4) DEFINITIONS.—For purposes of this sub- 8 section— 9 (A) QUALIFIED DISASTER DISTRIBU- 10 TION.—Except as provided in paragraph (2), 11 the term ‘‘qualified disaster distribution’’ means 12 any distribution from an eligible retirement 13 plan made— 14 (i) on or after the first day of the in- 15 cident period of a qualified disaster and 16 before the date which is 180 days after the 17 date of the enactment of this Act, and 18 (ii) to an individual whose principal 19 place of abode at any time during the inci- 20 dent period of such qualified disaster is lo- 21 cated in the qualified disaster area with re- 22 spect to such qualified disaster and who 23 has sustained an economic loss by reason 24 of such qualified disaster. 25 VerDate Sep 11 2014 20:35 Oct 24, 2020 Jkt 019200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\H8440.IH H8440 pbinns on DSKJLVW7X2PROD with BILLS 8 •HR 8440 IH (B) ELIGIBLE RETIREMENT PLAN.—The 1 term ‘‘eligible retirement plan’’ shall have the 2 meaning given such term by section 3 402(c)(8)(B) of the Internal Revenue Code of 4 1986. 5 (5) INCOME INCLUSION SPREAD OVER 3-YEAR 6 PERIOD.— 7 (A) IN GENERAL.—In the case of any 8 qualified disaster distribution, unless the tax- 9 payer elects not to have this paragraph apply 10 for any taxable year, any amount required to be 11 included in gross income for such taxable year 12 shall be so included ratably over the 3-taxable- 13 year period beginning with such taxable year. 14 (B) SPECIAL RULE.—For purposes of sub- 15 paragraph (A), rules similar to the rules of sub- 16 paragraph (E) of section 408A(d)(3) of the In- 17 ternal Revenue Code of 1986 shall apply. 18 (6) SPECIAL RULES.— 19 (A) EXEMPTION OF DISTRIBUTIONS FROM 20 TRUSTEE TO TRUSTEE TRANSFER AND WITH- 21 HOLDING RULES.—For purposes of sections 22 401(a)(31), 402(f), and 3405 of the Internal 23 Revenue Code of 1986, qualified disaster dis- 24 VerDate Sep 11 2014 20:35 Oct 24, 2020 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H8440.IH H8440 pbinns on DSKJLVW7X2PROD with BILLS 9 •HR 8440 IH tributions shall not be treated as eligible roll- 1 over distributions. 2 (B) QUALIFIED DISASTER DISTRIBUTIONS 3 TREATED AS MEETING PLAN DISTRIBUTION RE- 4 QUIREMENTS.—For purposes the Internal Rev- 5 enue Code of 1986, a qualified disaster dis- 6 tribution shall be treated as meeting the re- 7 quirements of sections 401(k)(2)(B)(i), 8 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) 9 of such Code. 10 (b) RECONTRIBUTIONS OF WITHDRAWALS FOR 11 HOME PURCHASES.— 12 (1) RECONTRIBUTIONS.— 13 (A) IN GENERAL.—Any individual who re- 14 ceived a qualified distribution may, during the 15 applicable period, make 1 or more contributions 16 in an aggregate amount not to exceed the 17 amount of such qualified distribution to an eli- 18 gible retirement plan (as defined in section 19 402(c)(8)(B) of the Internal Revenue Code of 20 1986) of which such individual is a beneficiary 21 and to which a rollover contribution of such dis- 22 tribution could be made under section 402(c), 23 403(a)(4), 403(b)(8), or 408(d)(3), of such 24 Code, as the case may be. 25 VerDate Sep 11 2014 20:35 Oct 24, 2020 Jkt 019200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H8440.IH H8440 pbinns on DSKJLVW7X2PROD with BILLS 10 •HR 8440 IH (B) TREATMENT OF REPAYMENTS.—Rules 1 similar to the rules of subparagraphs (B) and 2 (C) of subsection (a)(3) shall apply for purposes 3 of this subsection. 4 (2) QUALIFIED DISTRIBUTION.—For purposes 5 of this subsection, the term ‘‘qualified distribution’’ 6 means any distribution— 7 (A) described in section 8 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only 9 to the extent such distribution relates to finan- 10 cial hardship), 403(b)(11)(B), or 72(t)(2)(F), 11 of the Internal Revenue Code of 1986, 12 (B) which was to be used to purchase or 13 construct a principal residence in a qualified 14 disaster area, but which was not so used on ac- 15 count of the qualified disaster with respect to 16 such area, and 17 (C) which was received during the period 18 beginning on the date which is 180 days before 19 the first day of the incident period of such 20 qualified disaster and ending on the date which 21 is 30 days after the last day of such incident 22 period. 23 (3) APPLICABLE PERIOD.—For purposes of this 24 subsection, the term ‘‘applicable period’’ means, in 25 VerDate Sep 11 2014 20:35 Oct 24, 2020 Jkt 019200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H8440.IH H8440 pbinns on DSKJLVW7X2PROD with BILLS 11 •HR 8440 IH the case of a principal residence in a qualified dis- 1 aster area with respect to any qualified disaster, the 2 period beginning on the first day of the incident pe- 3 riod of such qualified disaster and ending on the 4 date which is 180 days after the date of the enact- 5 ment of this Act. 6 (c) LOANS FROM QUALIFIED PLANS.— 7 (1) INCREASE IN LIMIT ON LOANS NOT TREAT- 8 ED AS DISTRIBUTIONS.—In the case of any loan 9 from a qualified employer plan (as defined under 10 section 72(p)(4) of the Internal Revenue Code of 11 1986) to a qualified individual made during the 180- 12 day period beginning on the date of the enactment 13 of this Act— 14 (A) clause (i) of section 72(p)(2)(A) of 15 such Code shall be applied by substituting 16 ‘‘$100,000’’ for ‘‘$50,000’’, and 17 (B) clause (ii) of such section shall be ap- 18 plied by substituting ‘‘the present value of the 19 nonforfeitable accrued benefit of the employee 20 under the plan’’ for ‘‘one-half of the present 21 value of the nonforfeitable accrued benefit of 22 the employee under the plan’’. 23 (2) DELAY OF REPAYMENT.—In the case of a 24 qualified individual (with respect to any qualified 25 VerDate Sep 11 2014 20:35 Oct 24, 2020 Jkt 019200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H8440.IH H8440 pbinns on DSKJLVW7X2PROD with BILLS 12 •HR 8440 IH disaster) with an outstanding loan (on or after the 1 first day of the incident period of such qualified dis- 2 aster) from a qualified employer plan (as defined in 3 section 72(p)(4) of the Internal Revenue Code of 4 1986)— 5 (A) if the due date pursuant to subpara- 6 graph (B) or (C) of section 72(p)(2) of such 7 Code for any repayment with respect to such 8 loan occurs during the period beginning on the 9 first day of the incident period of such qualified 10 disaster and ending on the date which is 180 11 days after the last day of such incident period, 12 such due date shall be delayed for 1 year (or, 13 if later, until the date which is 180 days after 14 the date of the enactment of this Act), 15 (B) any subsequent repayments with re- 16 spect to any such loan shall be appropriately 17 adjusted to reflect the delay in the due date 18 under subparagraph (A) and any interest accru- 19 ing during such delay, and 20 (C) in determining [Text truncated for display. 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