AICPA Submits Disaster Assistance Tax Reform Proposals to Senate Finance Committee

April 14, 2015

Washington, D.C. (April 14, 2015) – The American Institute of CPAs (AICPA) sent a comment letter to the Senate Finance Committee Tax Reform Working Group on Community Development and Infrastructure outlining its recommendations for permanent tax provisions related to disaster relief. 

“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 AICPA urged 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’s “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; and

  10. Increase the medical expense deduction.