Lawmakers Urge Swift Passage of Hurricane, Wildfire Tax Relief
Bloomberg Tax – House Republicans and Democrats are pushing their colleagues to provide tax relief for Americans recovering from hurricanes, wildfires, and the Ohio train derailment, as some taxpayers run up against an Oct. 15 deadline.
Lawmakers over the past year have introduced bills that would provide special tax treatment or allow exemptions relating to disaster aid and expenses incurred due to presidentially declared natural disasters. While the IRS allowed many taxpayers impacted by disasters to delay filing their tax returns until Oct. 15, that deadline is fast approaching and Congress, amid a looming government shutdown, doesn’t have plans to take up the bills before the end of the year.
Rep. Greg Steube (R-Fla.) noted that if his bill to give special tax treatment to 2022’s Hurricane Ian victims is passed by the end of the year, those affected by the hurricane would have to know to amend their tax returns to get the tax relief for 2022. Ways and Means Chair Jason Smith (R-Mo.) has said he hopes to get the disaster relief bills resolved before year-end.
“Obviously, at this point, I still am pushing for it to get on an agenda,” said Steube, who is a member of the tax-writing Ways and Means Committee. “Everybody keeps telling me that they’ll do it by the end of the year, so I’m not worried that it won’t happen. It would just be a lot easier for people in my district for it to happen before October.”
The plan, Steube said, is to eventually mark up tax bills regarding wildfires, hurricanes, and the East Palestine, Ohio, train derailment together, adding that they would all likely garner bipartisan support. Many of the bills already have that support, and some have been outstanding since the last Congress. Steube’s legislation is cosponsored by Rep. Jimmy Panetta (D-Calif.), also a member of Ways and Means.
California Reps. Mike Thompson (D) and Doug LaMalfa (R) have been hoping to pass legislation that would prevent some wildfire victims from having to pay tax on compensation they’ve received as disaster aid for losses and damages suffered during a wildfire. The pair in July introduced an expanded version of their bill to cover more wildfires and make it easier for the legislation to be included in either a disaster relief or a tax package.
LaMalfa warned during a Ways and Means member day hearing that many taxpayers are waiting for this bill to pass by Oct. 15, but risk having to wait for a refund or possibly incur penalties.
He told Bloomberg Tax on Tuesday that the current impasses over government funding dampen his hopes for meeting that deadline.
“I’m going to keep my fingers crossed, but you see how things are going around here,” LaMalfa said in a brief interview.
Other bills include a proposal from Sen. Rick Scott (R-Fla.) and Rep. Kat Cammack (R-Fla.), introduced earlier this month, to provide aid and tax relief for Floridians impacted by Hurricane Idalia. Rep. Bill Johnson (R-Ohio) also has legislation, sponsored by the entire Ohio delegation, to provide tax relief for victims of the East Palestine derailment.
Johnson, though, said end-of-year passage works for his constituents, as the incident occurred in 2023.
“As long as we get it passed sometime this year, before next tax season, we’ll be fine,” he said.