II 

116TH CONGRESS 

2D SESSION S. 4596 

To provide tax relief for persons affected by certain 2020 disasters. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 16, 2020 

Ms. ERNST (for herself, Mr. GRASSLEY, Mrs. FEINSTEIN, Mr. CASSIDY, and 

Mr. KENNEDY) introduced the following bill; which was read twice and 

referred to the Committee on Finance 

A BILL 

To provide tax relief for persons affected by certain 2020 

disasters. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Disaster Tax Relief 

5 Act of 2020’’. 

6 SEC. 2. DEFINITIONS. 

7 For purposes of this Act— 

8 (1) QUALIFIED DISASTER AREA.—The term 

9 ‘‘qualified disaster area’’ means any area with re10 spect to which a major disaster was declared, during 


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1 the period beginning on July 1, 2020, and ending on 

2 the date which is 60 days after the date of the en3 actment of this Act, by the President under section 

4 401 of the Robert T. Stafford Disaster Relief and 

5 Emergency Assistance Act if the incident period of 

6 the disaster with respect to which such declaration 

7 is made begins on or before the date of the enact8 ment of this Act. 

9 (2) QUALIFIED DISASTER ZONE.—The term 

10 ‘‘qualified disaster zone’’ means that portion of any 

11 qualified disaster area which was determined by the 

12 President, during the period beginning on July 1, 

13 2020, and ending on the date which is 60 days after 

14 the date of the enactment of this Act, to warrant in15 dividual or individual and public assistance from the 

16 Federal Government under the Robert T. Stafford 

17 Disaster Relief and Emergency Assistance Act by 

18 reason of the qualified disaster with respect to such 

19 disaster area. 

20 (3) QUALIFIED DISASTER.—The term ‘‘quali21 fied disaster’’ means, with respect to any qualified 

22 disaster area, the disaster by reason of which a 

23 major disaster was declared with respect to such 

24 area. 


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1 (4) INCIDENT PERIOD.—The term ‘‘incident pe2 riod’’ means, with respect to any qualified disaster, 

3 the period specified by the Federal Emergency Man4 agement Agency as the period during which such 

5 disaster occurred (except that for purposes of this 

6 Act such period shall not be treated as beginning be7 fore July 1, 2020, or ending after the date which is 

8 30 days after the date of the enactment of this Act). 

9 SEC. 3. SPECIAL DISASTER-RELATED RULES FOR USE OF 

10 RETIREMENT FUNDS. 

11 (a) TAX-FAVORED WITHDRAWALS FROM RETIRE12 MENT PLANS.— 

13 (1) IN GENERAL.—Section 72(t) of the Internal 

14 Revenue Code of 1986 shall not apply to any quali15 fied disaster distribution. 

16 (2) AGGREGATE DOLLAR LIMITATION.— 

17 (A) IN GENERAL.—For purposes of this 

18 subsection, the aggregate amount of distribu19 tions received by an individual which may be 

20 treated as qualified disaster distributions for 

21 any taxable year shall not exceed the excess (if 

22 any) of— 

23 (i) $100,000, over 


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1 (ii) the aggregate amounts treated as 

2 qualified disaster distributions received by 

3 such individual for all prior taxable years. 

4 (B) TREATMENT OF PLAN DISTRIBU5 TIONS.—If a distribution to an individual would 

6 (without regard to subparagraph (A)) be a 

7 qualified disaster distribution, a plan shall not 

8 be treated as violating any requirement of the 

9 Internal Revenue Code of 1986 merely because 

10 the plan treats such distribution as a qualified 

11 disaster distribution, unless the aggregate 

12 amount of such distributions from all plans 

13 maintained by the employer (and any member 

14 of any controlled group which includes the em15 ployer) to such individual exceeds $100,000. 

16 (C) CONTROLLED GROUP.—For purposes 

17 of subparagraph (B), the term ‘‘controlled 

18 group’’ means any group treated as a single 

19 employer under subsection (b), (c), (m), or (o) 

20 of section 414 of the Internal Revenue Code of 

21 1986. 

22 (D) SPECIAL RULE FOR INDIVIDUALS AF23 FECTED BY MORE THAN ONE DISASTER.—The 

24 limitation of subparagraph (A) shall be applied 


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1 separately with respect to distributions made 

2 with respect to each qualified disaster. 

3 (3) AMOUNT DISTRIBUTED MAY BE REPAID.— 

4 (A) IN GENERAL.—Any individual who re5 ceives a qualified disaster distribution may, at 

6 any time during the 3-year period beginning on 

7 the day after the date on which such distribu8 tion was received, make 1 or more contributions 

9 in an aggregate amount not to exceed the 

10 amount of such distribution to an eligible retire11 ment plan of which such individual is a bene12 ficiary and to which a rollover contribution of 

13 such distribution could be made under section 

14 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 

15 457(e)(16), of the Internal Revenue Code of 

16 1986, as the case may be. 

17 (B) TREATMENT OF REPAYMENTS OF DIS18 TRIBUTIONS FROM ELIGIBLE RETIREMENT

19 PLANS OTHER THAN IRAS.—For purposes of 

20 the Internal Revenue Code of 1986, if a con21 tribution is made pursuant to subparagraph (A) 

22 with respect to a qualified disaster distribution 

23 from an eligible retirement plan other than an 

24 individual retirement plan, then the taxpayer 

25 shall, to the extent of the amount of the conVerDate Sep 11 2014 22:29 Sep 21, 2020 Jkt 099200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S4596.IS S4596

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1 tribution, be treated as having received the 

2 qualified disaster distribution in an eligible roll3 over distribution (as defined in section 

4 402(c)(4) of such Code) and as having trans5 ferred the amount to the eligible retirement 

6 plan in a direct trustee to trustee transfer with7 in 60 days of the distribution. 

8 (C) TREATMENT OF REPAYMENTS OF DIS9 TRIBUTIONS FROM IRAS.—For purposes of the 

10 Internal Revenue Code of 1986, if a contribu11 tion is made pursuant to subparagraph (A) 

12 with respect to a qualified disaster distribution 

13 from an individual retirement plan (as defined 

14 by section 7701(a)(37) of such Code), then, to 

15 the extent of the amount of the contribution, 

16 the qualified disaster distribution shall be treat17 ed as a distribution described in section 

18 408(d)(3) of such Code and as having been 

19 transferred to the eligible retirement plan in a 

20 direct trustee to trustee transfer within 60 days 

21 of the distribution. 

22 (4) DEFINITIONS.—For purposes of this sub23 section— 

24 (A) QUALIFIED DISASTER DISTRIBU25 TION.—Except as provided in paragraph (2), 


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1 the term ‘‘qualified disaster distribution’’ means 

2 any distribution from an eligible retirement 

3 plan made— 

4 (i) on or after the first day of the in5 cident period of a qualified disaster and 

6 before the date which is 180 days after the 

7 date of the enactment of this Act, and 

8 (ii) to an individual whose principal 

9 place of abode at any time during the inci10 dent period of such qualified disaster is lo11 cated in the qualified disaster area with re12 spect to such qualified disaster and who 

13 has sustained an economic loss by reason 

14 of such qualified disaster. 

15 (B) ELIGIBLE RETIREMENT PLAN.—The 

16 term ‘‘eligible retirement plan’’ shall have the 

17 meaning given such term by section 

18 402(c)(8)(B) of the Internal Revenue Code of 

19 1986. 

20 (5) INCOME INCLUSION SPREAD OVER 3-YEAR

21 PERIOD.— 

22 (A) IN GENERAL.—In the case of any 

23 qualified disaster distribution, unless the tax24 payer elects not to have this paragraph apply 

25 for any taxable year, any amount required to be 


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1 included in gross income for such taxable year 

2 shall be so included ratably over the 3-taxable3 year period beginning with such taxable year. 

4 (B) SPECIAL RULE.—For purposes of sub5 paragraph (A), rules similar to the rules of sub6 paragraph (E) of section 408A(d)(3) of the In7 ternal Revenue Code of 1986 shall apply. 

8 (6) SPECIAL RULES.— 

9 (A) EXEMPTION OF DISTRIBUTIONS FROM

10 TRUSTEE TO TRUSTEE TRANSFER AND WITH11 HOLDING RULES.—For purposes of sections 

12 401(a)(31), 402(f), and 3405 of the Internal 

13 Revenue Code of 1986, qualified disaster dis14 tributions shall not be treated as eligible roll15 over distributions. 

16 (B) QUALIFIED DISASTER DISTRIBUTIONS

17 TREATED AS MEETING PLAN DISTRIBUTION RE18 QUIREMENTS.—For purposes the Internal Rev19 enue Code of 1986, a qualified disaster dis20 tribution shall be treated as meeting the re21 quirements of sections 401(k)(2)(B)(i), 

22 403(b)(7)(A)(i), 403(b)(11), and 457(d)(1)(A) 

23 of such Code and section 8433(h)(1) of title 5, 

24 United States Code, and, in the case of a 

25 money purchase pension plan, a qualified disVerDate Sep 11 2014 22:29 Sep 21, 2020 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S4596.IS S4596

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1 aster distribution which is an in-service with2 drawal shall be treated as meeting the distribu3 tion rules of section 401(a) of such Code. 

4 (b) RECONTRIBUTIONS OF WITHDRAWALS FOR

5 HOME PURCHASES.— 

6 (1) RECONTRIBUTIONS.— 

7 (A) IN GENERAL.—Any individual who re8 ceived a qualified distribution may, during the 

9 applicable period, make 1 or more contributions 

10 in an aggregate amount not to exceed the 

11 amount of such qualified distribution to an eli12 gible retirement plan (as defined in section 

13 402(c)(8)(B) of the Internal Revenue Code of 

14 1986) of which such individual is a beneficiary 

15 and to which a rollover contribution of such dis16 tribution could be made under section 402(c), 

17 403(a)(4), 403(b)(8), or 408(d)(3), of such 

18 Code, as the case may be. 

19 (B) TREATMENT OF REPAYMENTS.—Rules 

20 similar to the rules of subparagraphs (B) and 

21 (C) of subsection (a)(3) shall apply for purposes 

22 of this subsection. 

23 (2) QUALIFIED DISTRIBUTION.—For purposes 

24 of this subsection, the term ‘‘qualified distribution’’ 

25 means any distribution— 


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1 (A) described in section 

2 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(i) (but only 

3 to the extent such distribution relates to finan4 cial hardship), 403(b)(11)(B), or 72(t)(2)(F), 

5 of the Internal Revenue Code of 1986, 

6 (B) which was to be used to purchase or 

7 construct a principal residence in a qualified 

8 disaster area, but which was not so used on ac9 count of the qualified disaster with respect to 

10 such area, and 

11 (C) which was received during the period 

12 beginning on the date which is 180 days before 

13 the first day of the incident period of such 

14 qualified disaster and ending on the date which 

15 is 30 days after the last day of such incident 

16 period. 

17 (3) APPLICABLE PERIOD.—For purposes of this 

18 subsection, the term ‘‘applicable period’’ means, in 

19 the case of a principal residence in a qualified dis20 aster area with respect to any qualified disaster, the 

21 period beginning on the first day of the incident pe22 riod of such qualified disaster and ending on the 

23 date which is 180 days after the date of the enact24 ment of this Act. 

25 (c) LOANS FROM QUALIFIED PLANS.— 


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1 (1) INCREASE IN LIMIT ON LOANS NOT TREAT2 ED AS DISTRIBUTIONS.—In the case of any loan 

3 from a qualified employer plan (as defined under 

4 section 72(p)(4) of the Internal Revenue Code of 

5 1986) to a qualified individual made during the 180- 

6 day period beginning on the date of the enactment 

7 of this Act— 

8 (A) clause (i) of section 72(p)(2)(A) of 

9 such Code shall be applied by substituting 

10 ‘‘$100,000’’ for ‘‘$50,000’’, and 

11 (B) clause (ii) of such section shall be ap12 plied by substituting ‘‘the present value of the 

13 nonforfeitable accrued benefit of the employee 

14 under the plan’’ for ‘‘one-half of the present 

15 value of the nonforfeitable accrued benefit of 

16 the employee under the plan’’. 

17 (2) DELAY OF REPAYMENT.—In the case of a 

18 qualified individual (with respect to any qualified 

19 disaster) with an outstanding loan (on or after the 

20 first day of the incident period of such qualified dis21 aster) from a qualified employer plan (as defined in 

22 section 72(p)(4) of the Internal Revenue Code of 

23 1986)— 

24 (A) if the due date pursuant to subpara25 graph (B) or (C) of section 72(p)(2) of such 


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1 Code for any repayment with respect to such 

2 loan occurs during the period beginning on the 

3 first day of the incident period of such qualified 

4 disaster and ending on the date which is 180 

5 days after the last day of such incident period, 

6 such due date shall be delayed for 1 year (or, 

7 if later, until the date which is 180 days after 

8 the date of the enactment of this Act), 

9 (B) any subsequent repayments with re10 spect to any such loan shall be appropriately 

11 adjusted to reflect the delay in the due date 

12 under subparagraph (A) and any interest accru13 ing during such delay, and 

14 (C) in determining the 5-year period and 

15 the term of a loan under subparagraph (B) or 

16 (C) of section 72(p)(2) of such Code, the period 

17 described in subparagraph (A) of this para18 graph shall be disregarded. 

19 (3) QUALIFIED INDIVIDUAL.—For purposes of 

20 this subsection, the term ‘‘qualified individual’’ 

21 means any individual— 

22 (A) whose principal place of abode at any 

23 time during the incident period of any qualified 

24 disaster is located in the qualified disaster area 

25 with respect to such qualified disaster, and 


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1 (B) who has sustained an economic loss by 

2 reason of such qualified disaster. 

3 (d) PROVISIONS RELATING TO PLAN AMEND4 MENTS.— 

5 (1) IN GENERAL.—If this subsection applies to 

6 any amendment to any plan or annuity contract, 

7 such plan or contract shall be treated as being oper8 ated in accordance with the terms of the plan during 

9 the period described in paragraph (2)(B)(i). 

10 (2) AMENDMENTS TO WHICH SUBSECTION AP11 PLIES.— 

12 (A) IN GENERAL.—This subsection shall 

13 apply to any amendment to any plan or annuity 

14 contract which is made— 

15 (i) pursuant to any provision of this 

16 section, or pursuant to any regulation 

17 issued by the Secretary or the Secretary of 

18 Labor under any provision of this section, 

19 and 

20 (ii) on or before the last day of the 

21 first plan year beginning on or after Janu22 ary 1, 2021, or such later date as the Sec23 retary may prescribe. 

24 In the case of a governmental plan (as defined 

25 in section 414(d) of the Internal Revenue Code 


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1 of 1986), clause (ii) shall be applied by sub2 stituting the date which is 2 years after the 

3 date otherwise applied under clause (ii). 

4 (B) CONDITIONS.—This subsection shall 

5 not apply to any amendment unless— 

6 (i) during the period— 

7 (I) beginning on the date that 

8 this section or the regulation de9 scribed in subparagraph (A)(i) takes 

10 effect (or in the case of a plan or con11 tract amendment not required by this 

12 section or such regulation, the effec13 tive date specified by the plan), and 

14 (II) ending on the date described 

15 in subparagraph (A)(ii) (or, if earlier, 

16 the date the plan or contract amend17 ment is adopted), 

18 the plan or contract is operated as if such plan 

19 or contract amendment were in effect, and 

20 (ii) such plan or contract amendment 

21 applies retroactively for such period. 

22 SEC. 4. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS 

23 AFFECTED BY QUALIFIED DISASTERS. 

24 (a) IN GENERAL.—For purposes of section 38 of the 

25 Internal Revenue Code of 1986, in the case of an eligible 


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1 employer, the 2020 qualified disaster employee retention 

2 credit shall be treated as a credit listed at the end of sub3 section (b) of such section. For purposes of this sub4 section, the 2020 qualified disaster employee retention 

5 credit for any taxable year is an amount equal to 40 per6 cent of the qualified wages with respect to each eligible 

7 employee of such employer for such taxable year. The 

8 amount of qualified wages with respect to any employee 

9 which may be taken into account under this subsection 

10 by the employer for any taxable year shall not exceed 

11 $6,000 (reduced by the amount of qualified wages with 

12 respect to such employee which may be so taken into ac13 count for any prior taxable year). 

14 (b) DEFINITIONS.—For purposes of this section— 

15 (1) ELIGIBLE EMPLOYER.—The term ‘‘eligible 

16 employer’’ means any employer— 

17 (A) which conducted an active trade or 

18 business in a qualified disaster zone at any time 

19 during the incident period of the qualified dis20 aster with respect to such qualified disaster 

21 zone, and 

22 (B) with respect to whom the trade or 

23 business described in subparagraph (A) is inop24 erable at any time during the period beginning 

25 on the first day of the incident period of such 


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1 qualified disaster and ending on the date of the 

2 enactment of this Act, as a result of damage 

3 sustained by reason of such qualified disaster. 

4 (2) ELIGIBLE EMPLOYEE.—The term ‘‘eligible 

5 employee’’ means with respect to an eligible em6 ployer an employee whose principal place of employ7 ment with such eligible employer (determined imme8 diately before the qualified disaster referred to in 

9 paragraph (1)) was in the qualified disaster zone re10 ferred to in such paragraph. 

11 (3) QUALIFIED WAGES.—The term ‘‘qualified 

12 wages’’ means wages (as defined in section 51(c)(1) 

13 of the Internal Revenue Code of 1986, but without 

14 regard to section 3306(b)(2)(B) of such Code) paid 

15 or incurred by an eligible employer with respect to 

16 an eligible employee at any time on or after the date 

17 on which the trade or business described in para18 graph (1) first became inoperable at the principal 

19 place of employment of the employee (determined 

20 immediately before the qualified disaster referred to 

21 in such paragraph) and before the earlier of— 

22 (A) the date on which such trade or busi23 ness has resumed significant operations at such 

24 principal place of employment, or 


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1 (B) the date which is 150 days after the 

2 last day of the incident period of the qualified 

3 disaster referred to in paragraph (1). 

4 Such term shall include wages paid without regard 

5 to whether the employee performs no services, per6 forms services at a different place of employment 

7 than such principal place of employment, or per8 forms services at such principal place of employment 

9 before significant operations have resumed. 

10 (c) CERTAIN RULES TO APPLY.—For purposes of 

11 this section, rules similar to the rules of sections 51(i)(1), 

12 52, and 280C(a), of the Internal Revenue Code of 1986, 

13 shall apply. 

14 (d) ELECTION TO NOT TAKE CERTAIN WAGES INTO

15 ACCOUNT.— 

16 (1) IN GENERAL.—This section shall not apply 

17 to qualified wages paid by an eligible employer with 

18 respect to which such employer makes an election 

19 (at such time and in such manner as the Secretary 

20 may prescribe) to have this section not apply to such 

21 wages. 

22 (2) COORDINATION WITH PAYCHECK PROTEC23 TION PROGRAM.— 

24 (A) IN GENERAL.—Section 1106(a)(8) of 

25 the CARES Act is amended by striking ‘‘of this 


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1 Act.’’ and inserting ‘‘of this Act, except that 

2 such costs shall not include qualified wages (as 

3 defined in section 4 of the Disaster Tax Relief 

4 Act of 2020) which— 

5 ‘‘(A) are paid or incurred in calendar quar6 ters beginning after June 30, 2020, and 

7 ‘‘(B) are taken into account in determining 

8 the credit allowed under section 4 of the Dis9 aster Tax Relief Act of 2020’’. 

10 (B) GUIDANCE.—The Secretary, in con11 sultation with the Administrator of the Small 

12 Business Administration, shall issue guidance 

13 providing that payroll costs paid or incurred 

14 during the covered period shall not fail to be 

15 treated as qualified wages under this section by 

16 reason of an election under paragraph (1) to 

17 the extent that a covered loan of the eligible 

18 employer is not forgiven under section 1106(b) 

19 of the CARES Act by reason of such payroll 

20 costs. Terms used in the preceding sentence 

21 which are also used in section 1106 of the 

22 CARES Act shall have the same meaning as 

23 when used in such section. 

24 (e) COORDINATION WITH OTHER TAX BENEFITS.— 

25 Any wages taken into account in determining the credit 


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1 allowed under this section shall not be taken into account 

2 as wages for purposes of section 51 of the Internal Rev3 enue Code of 1986 or section 2301 of the CARES Act. 

4 SEC. 5. OTHER DISASTER-RELATED TAX RELIEF PROVI5 SIONS. 

6 (a) SPECIAL RULES FOR QUALIFIED DISASTER RE7 LIEF CONTRIBUTIONS.— 

8 (1) INDIVIDUALS.—For the suspension of limi9 tations on qualified disaster relief contributions 

10 made by an individual during 2020, see section 

11 2205(a) of the CARES Act. 

12 (2) CORPORATIONS.—In the case of a qualified 

13 disaster relief contribution made by a corporation— 

14 (A) section 2205(a)(2)(B) of the CARES 

15 Act shall be applied first with respect to quali16 fied contributions other than qualified disaster 

17 relief contributions and then separately with re18 spect to such qualified disaster relief contribu19 tion, and 

20 (B) in applying such section to such quali21 fied disaster relief contributions, clause (i) 

22 thereof shall be applied— 

23 (i) by substituting ‘‘100 percent’’ for 

24 ‘‘25 percent’’, and 


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1 (ii) by treating qualified contributions 

2 other than qualified disaster relief con3 tributions as contributions allowed under 

4 section 170(b)(2) of the Internal Revenue 

5 Code of 1986. 

6 (3) QUALIFIED DISASTER RELIEF CONTRIBU7 TION.—For purposes of this subsection, the term 

8 ‘‘qualified disaster relief contribution’’ means any 

9 qualified contribution (as defined in section 

10 2205(a)(3) of the CARES Act) if— 

11 (A) such contribution— 

12 (i) is paid, during the period begin13 ning on July 1, 2020, and ending on the 

14 date which is 90 days after the date of the 

15 enactment of this Act, and 

16 (ii) is made for relief efforts in one or 

17 more qualified disaster areas, 

18 (B) the taxpayer obtains from such organi19 zation contemporaneous written acknowledg20 ment (within the meaning of section 170(f)(8) 

21 of such Code) that such contribution was used 

22 (or is to be used) for relief efforts described in 

23 subparagraph (A)(ii), and 


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1 (C) the taxpayer has elected the applica2 tion of this subsection with respect to such con3 tribution. 

4 (b) SPECIAL RULES FOR QUALIFIED DISASTER-RE5 LATED PERSONAL CASUALTY LOSSES.— 

6 (1) IN GENERAL.—If an individual has a net 

7 disaster loss for any taxable year— 

8 (A) the amount determined under section 

9 165(h)(2)(A)(ii) of the Internal Revenue Code 

10 of 1986 shall be equal to the sum of— 

11 (i) such net disaster loss, and 

12 (ii) so much of the excess referred to 

13 in the matter preceding clause (i) of sec14 tion 165(h)(2)(A) of such Code (reduced 

15 by the amount in clause (i) of this sub16 paragraph) as exceeds 10 percent of the 

17 adjusted gross income of the individual, 

18 (B) section 165(h)(1) of such Code shall 

19 be applied with respect to qualified disaster-re20 lated personal casualty losses by substituting 

21 ‘‘$500’’ for ‘‘$500 ($100 for taxable years be22 ginning after December 31, 2009)’’, 

23 (C) the standard deduction determined 

24 under section 63(c) of such Code shall be in25 creased by the net disaster loss, and 


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1 (D) section 56(b)(1)(D) of such Code shall 

2 not apply to so much of the standard deduction 

3 as is attributable to the increase under sub4 paragraph (C) of this paragraph. 

5 (2) NET DISASTER LOSS.—For purposes of this 

6 subsection, the term ‘‘net disaster loss’’ means the 

7 excess of qualified disaster-related personal casualty 

8 losses over personal casualty gains (as defined in 

9 section 165(h)(3)(A) of the Internal Revenue Code 

10 of 1986). 

11 (3) QUALIFIED DISASTER-RELATED PERSONAL

12 CASUALTY LOSSES.—For purposes of this sub13 section, the term ‘‘qualified disaster-related personal 

14 casualty losses’’ means losses described in section 

15 165(c)(3) of the Internal Revenue Code of 1986 

16 which arise in a qualified disaster area on or after 

17 the first day of the incident period of the qualified 

18 disaster to which such area relates, and which are 

19 attributable to such qualified disaster. 

20 (c) SPECIAL RULE FOR DETERMINING EARNED IN21 COME.— 

22 (1) IN GENERAL.—In the case of a qualified in23 dividual, if the earned income of the taxpayer for the 

24 applicable taxable year is less than the earned in25 come of the taxpayer for the preceding taxable year, 


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1 the credits allowed under sections 24(d) and 32 of 

2 the Internal Revenue Code of 1986 may, at the elec3 tion of the taxpayer, be determined by sub4 stituting— 

5 (A) such earned income for the preceding 

6 taxable year, for 

7 (B) such earned income for the applicable 

8 taxable year. 

9 (2) QUALIFIED INDIVIDUAL.—For purposes of 

10 this subsection, the term ‘‘qualified individual’’ 

11 means any individual whose principal place of abode 

12 at any time during the incident period of any quali13 fied disaster was located— 

14 (A) in the qualified disaster zone with re15 spect to such qualified disaster, or 

16 (B) in the qualified disaster area with re17 spect to such qualified disaster (but outside the 

18 qualified disaster zone with respect to such 

19 qualified disaster) and such individual was dis20 placed from such principal place of abode by 

21 reason of such qualified disaster. 

22 (3) APPLICABLE TAXABLE YEAR.—For pur23 poses of this subsection, the term ‘‘applicable taxable 

24 year’’ means— 


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1 (A) in the case of a qualified individual 

2 other than an individual described in subpara3 graph (B), any taxable year which includes any 

4 portion of the incident period of the qualified 

5 disaster to which the qualified disaster area re6 ferred to in paragraph (2)(A) relates, or 

7 (B) in the case of a qualified individual de8 scribed in subparagraph (B) of paragraph (2), 

9 any taxable year which includes any portion of 

10 the period described in such subparagraph. 

11 (4) EARNED INCOME.—For purposes of this 

12 subsection, the term ‘‘earned income’’ has the mean13 ing given such term under section 32(c) of the Inter14 nal Revenue Code of 1986. 

15 (5) SPECIAL RULES.— 

16 (A) APPLICATION TO JOINT RETURNS.— 

17 For purposes of paragraph (1), in the case of 

18 a joint return for an applicable taxable year— 

19 (i) such paragraph shall apply if ei20 ther spouse is a qualified individual, and 

21 (ii) the earned income of the taxpayer 

22 for the preceding taxable year shall be the 

23 sum of the earned income of each spouse 

24 for such preceding taxable year. 


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1 (B) UNIFORM APPLICATION OF ELEC2 TION.—Any election made under paragraph (1) 

3 shall apply with respect to both sections 24(d) 

4 and 32 of the Internal Revenue Code of 1986. 

5 (C) ERRORS TREATED AS MATHEMATICAL

6 ERROR.—For purposes of section 6213 of the 

7 Internal Revenue Code of 1986, an incorrect 

8 use on a return of earned income pursuant to 

9 paragraph (1) shall be treated as a mathe10 matical or clerical error. 

11 (D) NO EFFECT ON DETERMINATION OF

12 GROSS INCOME, ETC.—Except as otherwise pro13 vided in this subsection, the Internal Revenue 

14 Code of 1986 shall be applied without regard to 

15 any substitution under paragraph (1). 

16 SEC. 6. TREATMENT OF CERTAIN POSSESSIONS. 

17 (a) PAYMENTS TO POSSESSIONS WITH MIRROR

18 CODE TAX SYSTEMS.—The Secretary of the Treasury 

19 shall pay to each possession of the United States which 

20 has a mirror code tax system amounts equal to the loss 

21 (if any) to that possession by reason of the application 

22 of the provisions of this Act. Such amounts shall be deter23 mined by the Secretary of the Treasury based on informa24 tion provided by the government of the respective posses25 sion. 


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1 (b) PAYMENTS TO OTHER POSSESSIONS.—The Sec2 retary of the Treasury shall pay to each possession of the 

3 United States which does not have a mirror code tax sys4 tem amounts estimated by the Secretary of the Treasury 

5 as being equal to the aggregate benefits (if any) that 

6 would have been provided to residents of such possession 

7 by reason of the provisions of this Act if a mirror code 

8 tax system had been in effect in such possession. The pre9 ceding sentence shall not apply unless the respective pos10 session has a plan, which has been approved by the Sec11 retary of the Treasury, under which such possession will 

12 promptly distribute such payments to its residents. 

13 (c) MIRROR CODE TAX SYSTEM.—For purposes of 

14 this section, the term ‘‘mirror code tax system’’ means, 

15 with respect to any possession of the United States, the 

16 income tax system of such possession if the income tax 

17 liability of the residents of such possession under such sys18 tem is determined by reference to the income tax laws of 

19 the United States as if such possession were the United 

20 States. 

21 (d) TREATMENT OF PAYMENTS.—For purposes of 

22 section 1324 of title 31, United States Code, the payments 

23 under this section shall be treated in the same manner 


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1 as a refund due from a credit provision referred to in sub2 section (b)(2) of such section. 

Æ 


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