COMPARISON OF H.R. 2884,

THE "VICTIMS OF TERRORISM TAX RELIEF ACT OF 2001"

AS PASSED BY THE HOUSE OF REPRESENTATIVES ON DECEMBER 13, 2001, AND

 AS PASSED BY THE SENATE

Prepared by the Staff

of the

JOINT COMMITTEE ON TAXATION

December 14, 2001

JCX-87-01
1

INTRODUCTION

This document, 1 prepared by the staff of the Joint Committee on Taxation, contains a comparison of H.R. 2884, the "Victims 

of Terrorism Tax Relief Act of 2001" as passed by the House of Representatives on December 13, 2001, and as passed by the Senate. 

H.R. 2884 was originally passed by the House on September 13, 2001. H.R. 2884, as modified, was passed by the Senate on 

November 16, 2001. The House passed H.R. 2884, as further modified, on December 13, 2001.

 

1

 This document may be cited as follows: Joint Committee on Taxation, Comparison of H.R. 2884, The "Victims of Terrorism 

Tax Relief Act of 2001" as Passed by the House of Representatives on December 13, 2001, and as Passed by the Senate (JCX-87-01),

December 14, 2001.
2

COMPARISON OF PROVISIONS OF H.R. 2884, THE “VICTIMS OF TERRORISM TAX RELIEF ACT OF 2001” 

AS PASSED BY THE HOUSE OF REPRESENTATIVES AND THE SENATE

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

A. Relief Provisions for Victims 

of Specific Terrorist Attacks

1. Income and employment tax 

relief for individuals who die as a 

result of terrorist attacks (sec. 101 

of the House bill and sec. 101 of 

the Senate amendment)

Provides the same income tax 

relief currently provided to 

military and civilian employees of 

the U.S. who die as a result of a 

terrorist attack outside the U.S. to 

victims of the terrorist attacks 

against the United States on April 

19, 1995, and September 11, 2001, 

and victims of an attack involving 

anthrax occurring on or after 

September 11, 2001, and before 

January 1, 2002. Thus, such 

individuals are not subject to 

income tax for the year of death 

and prior years beginning with the 

year before the year in which the 

wounds or injury occurred.

Same as the House bill, except:

• provides relief from FICA 

taxes and self-employment 

taxes as well as income 

taxes, and

• relief does not apply to 

amounts that would have 

been paid if the death had 

occurred for another reason 

or amounts that would not 

have been paid but for an 

action taken after the date 

of the attack.
3

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

2. Exclusion of certain death 

benefits (sec. 102 of the House bill 

and sec. 204(a) of the Senate 

amendment)

Provides an exclusion for death 

benefits paid by an employer by 

reason of the death of an employee 

(including a self-employed 

individual) as a result of the 

terrorist attack against the United 

States on April 19, 1995, or 

September 11, 2001, or an attack 

involving anthrax occurring on or 

after September 11, 2001, and 

before January 1, 2002. Exclusion 

does not apply to amounts that 

would have been payable if the 

individual died for another reason. 

Effective for taxable years ending 

before, on, or after September 11, 

2001.

Same as the House bill except:

• the provision is not limited 

to specific terrorist attacks, 

• effective for taxable years 

ending on or after 

September 11, 2001; and

• technical modifications.

3. Estate tax reduction (sec. 103 of 

the House bill and sec. 102 of the 

Senate amendment)

Generally extends the same estate 

tax relief provided currently under 

Code section 2201 to military 

personnel who die in a combat 

zone or as a result of wounds or 

injury received in a combat zone 

to victims of the terrorist attacks 

against the United States on April 

19, 1995, and September 11, 2001, 

and victims of an attack involving 

anthrax occurring on or after 

September 11, 2001, and before 

January 1, 2002. Modifies the 

general operation of section 2201 

and provides that a taxpayer may 

elect not to have the provision 

apply.

Same as House bill.
4

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

4. Payments by charitable 

organizations treated as exempt 

payments (sec. 104 of the House 

bill and sec. 103 of the Senate 

amendment)

Payments made by a charitable 

organization by reason of death, 

injury, wounds or illness incurred 

as a result of the September 11, 

2001, attacks or attacks involving 

anthrax occurring on or after 

September 11, 2001, and before 

January 1, 2002, are treated as 

related to the organization’s 

exempt purpose if made in good 

faith using a reasonable and 

objective formula that is 

consistently applied and in 

furtherance of public purposes. If 

a private foundation makes such 

payments, the payments are not 

treated as made to a disqualified 

person. 

Effective for payments on or after 

September 11, 2001.

Same as House bill except the 

Senate amendment does not state 

that the payments be made in good

faith, that the formula used be 

reasonable, or that the payments be 

in furtherance of public purposes.
5

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

4. Exclusion for certain 

cancellations of indebtedness (sec. 

104 of the Senate amendment)

No provision. Excludes from income amounts 

realized from the discharge of 

indebtedness by reason of the death 

of an individual who dies from 

wounds or injury incurred as a 

result of the September 11, 2001, 

terrorist attacks, or as a result of a 

terrorist attack involving anthrax 

occurring on or after September 11,

2001, and before January 1, 2002. 

Reporting requirements do not 

apply to discharges excludable 

under the provision. 

Effective for discharges made on or 

after September 11, 2001, and 

before January 1, 2002.

B. General Relief for Victims of 

Disasters and Terrorist Actions 

1. Exclusion of disaster relief 

payments (sec. 201 of the House 

bill and sec. 201 of the Senate 

amendment)

Provides a specific statutory 

exclusion from income for victims 

compensation received under the 

Air Transportation Safety and 

System Stabilization Act and 

qualified disaster relief payments.

Same as House bill.

2. Authority to postpone certain 

deadlines and required actions 

(sec. 202 of the House bill and sec. 

202 of the Senate amendment)

Provides the Secretary the 

authority to extend tax-related 

deadlines for up to one year in the 

case of a disaster or terrorist 

attack. Also allows the Secretary 

to waive interest in such cases.

Provides similar authority to the 

Secretary of the Treasury, 

Secretary of Labor, and the PBGC 

to extend deadlines relating to 

employee benefit plans.

Same as House bill.
6

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

3. Application of certain 

provisions to terrorist activity (sec. 

203 of the House bill and sec. 

204(b) and (c) of the Senate 

amendment)

Extends relief provided by certain 

provisions in the case of terrorist 

attacks outside the U.S. to all 

terrorist attacks against the U.S.

Same as House bill.

4. Clarification of due date for 

airline excise tax deposits (sec. 

204 of the House bill and 205 of 

the Senate amendment)

Clarifies that the special deposit 

rules provided under the Air 

Transportation Safety and System 

Stabilization Act do not apply to 

employment taxes.

Same as House bill.

5. Treatment of certain structured 

settlement payments (sec. 205 of 

the House bill and sec. 105(a) of 

the Senate amendment)

Imposes a 40-percent excise tax on 

acquisitions of certain structured 

settlement payment rights under 

claims; the excise tax does not 

apply if the acquisition is 

approved in advance under an 

applicable State statute by a court 

or State administrative authority. 

Provides that the acquisition 

transaction does not affect the 

application of present-law rules. 

Effective for acquisitions entered 

into on or after the 30th day 

following enactment. 

Same as House bill, except that the 

provision is limited to structured 

settlements relating to claims 

arising from the September 11, 

2001, terrorist attacks, or to a 

terrorist attack involving anthrax 

occurring on or after September 11, 

2001, and before January 1, 2002.
7

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

6. Personal exemption deduction 

for certain disability trusts (sec. 

206 of the House bill and sec. 

105(b) of the Senate amendment)

Increases personal exemption 

deduction for certain disability 

trusts based on individual 

exemption deduction. 

Effective for taxable years ending

on or after September 11, 2001.

Same as House bill, except:

• applies only to disability 

trusts for beneficiaries 

disabled as the result of a 

wounding, injury, or illness 

resulting from the terrorist 

attacks of April 19, 1995, 

and September 11, 2001, or 

a terrorist attack involving 

anthrax occurring on or 

after September 11, 2001, 

and before January 1, 2002, 

• effective for taxable years 

ending before, on, or after 

September 11, 2001, and

• technical modifications.

7. IRS Disaster Response Team 

(sec. 203 of the Senate 

amendment)

No provision. Directs the Secretary to create a 

permanent Disaster Response 

Team.

8. Coordination with Air 

Transportation Safety and System 

Stabilization Act (sec. 206 of the 

Senate amendment)

No provision. Explanation of bill 

clarifies that the tax benefits 

provided by the bill are not 

intended to be collateral payments 

for purposes of the compensation 

that may be provided under the 

Air Transportation Safety and 

System Stabilization Act.

Provides that tax benefits provided 

by the bill are not collateral 

payments for purposes of the 

compensation that may be provided 

under the Air Transportation Safety 

and System Stabilization Act.

C. Tax Benefits for Area of New 

York City Damaged in Terrorist 

Attacks on September 11, 20012

 

2

 The New York City tax benefit provisions are compared in a separate document (JCX-89-01), as those provisions are not included in 

H.R. 2884, as passed by the Senate, but are contained in the “Economic Recovery and Homeland Defense Act of 2001,” introduced as an 

amendment by Senator Baucus (amendment #2125) to the Senate consideration of H.R. 3090. 
8

ITEM HOUSE BILL SENATE AMENDMENT POSSIBLE COMPROMISE

D. Disclosure of Tax 

Information in Terrorism and 

National Security Investigations

(sec. 401 of the House bill and sec. 

301 of the Senate amendment)

Authorizes the disclosure of 

returns, return information, and 

tax convention information, for 

purposes of investigating terrorist 

incidents, threats, or activities, and 

for analyzing intelligence 

concerning terrorist incidents, 

threats, or activities, upon 

satisfaction of certain 

requirements. Provision sunsets 

after December 31, 2003.

Same as the House bill.

E. No Impact on Social Security 

Trust Funds (sec. 501 of the 

House bill and sec. 106 of the 

Senate amendment)

Provides that the Secretary is to 

make appropriate transfers from 

general revenues to the Social 

Security Trust Fund so as to 

ensure that the Fund is not reduced 

as a result of the bill.

Same as House bill, except 

provision is limited to those 

sections of the bill providing relief 

from specific terrorist attacks.