II 

113TH CONGRESS 

2D SESSION S. 1991 

To amend the Internal Revenue Code of 1986 to allow individuals a deduction 

for amounts contributed to disaster savings accounts to help defray 

the cost of preparing their homes to withstand a disaster and to repair 

or replace property damaged or destroyed in a disaster. 

IN THE SENATE OF THE UNITED STATES 

FEBRUARY 4, 2014 

Mr. INHOFE introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To amend the Internal Revenue Code of 1986 to allow individuals a deduction for amounts contributed to disaster 

savings accounts to help defray the cost of preparing 

their homes to withstand a disaster and to repair or 

replace property damaged or destroyed in a disaster. 

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 Savings Ac5 counts Act of 2014’’. 


rfrederick on DSK6VPTVN1PROD with BILLS
2 

•S 1991 IS

1 SEC. 2. DEDUCTION FOR CONTRIBUTIONS TO DISASTER 

2 SAVINGS ACCOUNTS. 

3 (a) IN GENERAL.—Part VII of subchapter B of chap4 ter 1 of the Internal Revenue Code of 1986 (relating to 

5 additional itemized deductions for individuals) is amended 

6 by redesignating section 224 as section 225 and by insert7 ing after section 223 the following new section: 

8 ‘‘SEC. 224. DISASTER SAVINGS ACCOUNTS. 

9 ‘‘(a) DEDUCTION ALLOWED.—In the case of an eligi10 ble individual, there shall be allowed as a deduction for 

11 the taxable year an amount equal to the aggregate amount 

12 paid during such taxable year by or on behalf of such indi13 vidual to a disaster savings account of such individual. 

14 ‘‘(b) LIMITATION.— 

15 ‘‘(1) IN GENERAL.—The amount allowed as a 

16 deduction under subsection (a) to an individual for 

17 the taxable year shall not exceed $5,000. 

18 ‘‘(2) PARTIAL YEAR OF ELIGIBILITY.—In the 

19 case of an individual who is an eligible individual for 

20 only a portion of the taxable year, the limitation 

21 under paragraph (1) shall be the same proportion of 

22 $5,000 as such portion bears to the entire taxable 

23 year. 

24 ‘‘(c) ELIGIBLE INDIVIDUAL.—For purposes of this 

25 section, the term ‘eligible individual’ means any individual 


rfrederick on DSK6VPTVN1PROD with BILLS
3 

•S 1991 IS

1 if such individual occupied any residence in the United 

2 States at any time during the taxable year. 

3 ‘‘(d) DISASTER SAVINGS ACCOUNT.—For purposes of 

4 this section— 

5 ‘‘(1) IN GENERAL.—The term ‘disaster savings 

6 account’ means a trust created or organized in the 

7 United States as a disaster savings account exclu8 sively for the purpose of paying the qualified dis9 aster expenses of the account beneficiary, but only 

10 if the written governing instrument creating the 

11 trust meets the following requirements: 

12 ‘‘(A) Except in the case of a rollover con13 tribution described in subsection (f)(5), no con14 tribution will be accepted— 

15 ‘‘(i) unless it is in cash, or 

16 ‘‘(ii) to the extent such contribution, 

17 when added to previous contributions to 

18 the trust for the calendar year, exceeds the 

19 dollar limitation in effect under subsection 

20 (b). 

21 ‘‘(B) The trustee is a bank (as defined in 

22 section 408(n)), an insurance company (as de23 fined in section 816), or another person who 

24 demonstrates to the satisfaction of the Sec25 retary that the manner in which such person 


rfrederick on DSK6VPTVN1PROD with BILLS
4 

•S 1991 IS

1 will administer the trust will be consistent with 

2 the requirements of this section. 

3 ‘‘(C) No part of the trust assets will be in4 vested in life insurance contracts. 

5 ‘‘(D) The assets of the trust will not be 

6 commingled with other property except in a 

7 common trust fund or common investment 

8 fund. 

9 ‘‘(E) The interest of an individual in the 

10 balance in his account is nonforfeitable. 

11 ‘‘(2) QUALIFIED DISASTER EXPENSES.—The 

12 term ‘qualified disaster expenses’ means— 

13 ‘‘(A) disaster mitigation expenses, and 

14 ‘‘(B) disaster recovery expenses. 

15 ‘‘(3) DISASTER MITIGATION EXPENSES.—The 

16 term ‘disaster mitigation expenses’ means expenses 

17 for any of the following with respect to the residence 

18 referred to in subsection (c): 

19 ‘‘(A) Tornado safe rooms manufactured or 

20 constructed in accordance with FEMA 320 or 

21 FEMA 361 guidance or tornado shelters manu22 factured or constructed in accordance with the 

23 National Storm Shelter/International Code 

24 Council 500 standard. 


rfrederick on DSK6VPTVN1PROD with BILLS
5 

•S 1991 IS

1 ‘‘(B) Opening protection, including impact 

2 and wind resistant windows, exterior doors, and 

3 garage doors. 

4 ‘‘(C) Reinforcement of roof-to-wall and 

5 floor-to-wall connections for wind or seismic ac6 tivity. 

7 ‘‘(D) Roof covering for impact, fire, or 

8 high wind resistance. 

9 ‘‘(E) Cripple and shear walls to resist seis10 mic activity. 

11 ‘‘(F) Flood resistant building materials. 

12 ‘‘(G) Elevating structures and utilities 

13 above base flood elevation. 

14 ‘‘(H) Fire resistant exterior wall assem15 blies/systems. 

16 ‘‘(I) Lightning protection systems. 

17 ‘‘(J) Whole home standby generators. 

18 ‘‘(K) Any activity specified by the Sec19 retary as appropriate to mitigate the risks of 

20 future hazards (including earthquake, flood, 

21 hail, hurricane, lightning, power outage, tor22 nado, and wildfire) and other natural disasters. 

23 ‘‘(4) DISASTER RECOVERY EXPENSES.—The 

24 term ‘disaster recovery expenses’ means with respect 

25 to the residence referred to in subsection (c) any exVerDate Mar 15 2010 03:03 Feb 05, 2014 Jkt 039200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\S1991.IS S1991

rfrederick on DSK6VPTVN1PROD with BILLS
6 

•S 1991 IS

1 pense incurred to replace or repair disaster-related 

2 uninsured personal casualty personal losses totaling 

3 $3,000 or greater. 

4 ‘‘(5) DISASTER-RELATED UNINSURED PER5 SONAL CASUALTY LOSS.—The term ‘disaster-related 

6 uninsured personal casualty loss’ means a personal 

7 casualty loss (as defined in section 165(h)(4)(B), de8 termined without regard to the second sentence 

9 thereof) attributable to a State or federally declared 

10 disaster for which a deduction is allowable under 

11 section 165 (without regard to subsection (h)(1)). 

12 ‘‘(6) FEDERALLY DECLARED DISASTER.—The 

13 term ‘federally declared disaster’ has the meaning 

14 given such term by section 165(h)(3)(C). 

15 ‘‘(7) ACCOUNT BENEFICIARY.—The term ‘ac16 count beneficiary’ means the individual on whose be17 half the disaster savings account was established. 

18 ‘‘(e) TREATMENT OF ACCOUNT.— 

19 ‘‘(1) IN GENERAL.—A disaster savings account 

20 is exempt from taxation under this subtitle unless 

21 such account has ceased to be a disaster savings ac22 count. Notwithstanding the preceding sentence, any 

23 such account is subject to the taxes imposed by sec24 tion 511 (relating to imposition of tax on unrelated 

25 business income of charitable, etc. organizations). 


rfrederick on DSK6VPTVN1PROD with BILLS
7 

•S 1991 IS

1 ‘‘(2) ACCOUNT TERMINATIONS.—Rules similar 

2 to the rules of paragraphs (2) and (4) of section 

3 408(e) shall apply to disaster savings accounts, and 

4 any amount treated as distributed under such rules 

5 shall be treated as not used to pay disaster mitiga6 tion expenses. 

7 ‘‘(f) TAX TREATMENT OF DISTRIBUTIONS.— 

8 ‘‘(1) AMOUNTS USED FOR DISASTER MITIGA9 TION EXPENSES.—Any amount paid or distributed 

10 out of a disaster savings account which is used ex11 clusively to pay qualified disaster expenses of any 

12 account beneficiary shall not be includible in gross 

13 income. 

14 ‘‘(2) INCLUSION OF AMOUNTS NOT USED FOR

15 DISASTER MITIGATION EXPENSES.—Any amount 

16 paid or distributed out of a disaster savings account 

17 which is not used exclusively to pay the qualified dis18 aster expenses of the account beneficiary shall be in19 cluded in the gross income of such beneficiary. 

20 ‘‘(3) EXCESS CONTRIBUTIONS RETURNED BE21 FORE DUE DATE OF RETURN.— 

22 ‘‘(A) IN GENERAL.—If any excess con23 tribution is contributed for a taxable year to 

24 any disaster savings account of an individual, 

25 paragraph (2) shall not apply to distributions 


rfrederick on DSK6VPTVN1PROD with BILLS
8 

•S 1991 IS

1 from the disaster savings accounts of such indi2 vidual (to the extent such distributions do not 

3 exceed the aggregate excess contributions to all 

4 such accounts of such individual for such year) 

5 if— 

6 ‘‘(i) such distribution is received by 

7 the individual on or before the last day 

8 prescribed by law (including extensions of 

9 time) for filing such individual’s return for 

10 such taxable year, and 

11 ‘‘(ii) such distribution is accompanied 

12 by the amount of net income attributable 

13 to such excess contribution. 

14 Any net income described in clause (ii) shall be 

15 included in the gross income of the individual 

16 for the taxable year in which it is received. 

17 ‘‘(B) EXCESS CONTRIBUTION.—For pur18 poses of subparagraph (A), the term ‘excess 

19 contribution’ means any contribution (other 

20 than a rollover contribution described in para21 graph (5)) which is not deductible under this 

22 section. 

23 ‘‘(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT

24 USED FOR DISASTER MITIGATION EXPENSES.— 


rfrederick on DSK6VPTVN1PROD with BILLS
9 

•S 1991 IS

1 ‘‘(A) IN GENERAL.—The tax imposed by 

2 this chapter on the account beneficiary for any 

3 taxable year in which there is a payment or dis4 tribution from a disaster savings account of 

5 such beneficiary which is includible in gross in6 come under paragraph (2) shall be increased by 

7 20 percent of the amount which is so includible. 

8 ‘‘(B) EXCEPTION FOR DISABILITY OR

9 DEATH.—Subparagraph (A) shall not apply if 

10 the payment or distribution is made after the 

11 account beneficiary becomes disabled within the 

12 meaning of section 72(m)(7) or dies. 

13 ‘‘(5) ROLLOVER CONTRIBUTION.—An amount is 

14 described in this paragraph as a rollover contribu15 tion if it meets the requirements of subparagraphs 

16 (A) and (B). 

17 ‘‘(A) IN GENERAL.—Paragraph (2) shall 

18 not apply to any amount paid or distributed 

19 from a disaster savings account to the account 

20 beneficiary to the extent the amount received is 

21 paid into a disaster savings account for the ben22 efit of such beneficiary not later than the 60th 

23 day after the day on which the beneficiary re24 ceives the payment or distribution. 


rfrederick on DSK6VPTVN1PROD with BILLS
10 

•S 1991 IS

1 ‘‘(B) LIMITATION.—This paragraph shall 

2 not apply to any amount described in subpara3 graph (A) received by an individual from a dis4 aster savings account if, at any time during the 

5 1-year period ending on the day of such receipt, 

6 such individual received any other amount de7 scribed in subparagraph (A) from a disaster 

8 savings account which was not includible in the 

9 individual’s gross income because of the appli10 cation of this paragraph. 

11 ‘‘(g) COST-OF-LIVING ADJUSTMENT.— 

12 ‘‘(1) IN GENERAL.—In the case of a taxable 

13 year beginning after 2015, the $5,000 amount in 

14 subsection (b) shall be increased by an amount equal 

15 to— 

16 ‘‘(A) such dollar amount, multiplied by 

17 ‘‘(B) the cost-of-living adjustment deter18 mined under section 1(f)(3) for the calendar 

19 year in which such taxable year begins deter20 mined by substituting ‘calendar year 2014’ for 

21 ‘calendar year 1992’ in subparagraph (B) 

22 thereof. 

23 ‘‘(2) ROUNDING.—If any increase under para24 graph (1) is not a multiple of $50, such increase 

25 shall be rounded to the nearest multiple of $50. 


rfrederick on DSK6VPTVN1PROD with BILLS
11 

•S 1991 IS

1 ‘‘(h) SPECIAL RULES.— 

2 ‘‘(1) DENIAL OF DEDUCTION TO DEPEND3 ENTS.—No deduction shall be allowed under this 

4 section to any individual with respect to whom a de5 duction under section 151 is allowable to another 

6 taxpayer for a taxable year beginning in the cal7 endar year in which such individual’s taxable year 

8 begins. 

9 ‘‘(2) TAXABLE YEAR MUST BE FULL TAXABLE

10 YEAR.—Except in the case of a taxable year closed 

11 by reason of the death of the taxpayer, no deduction 

12 shall be allowed under this section in the case of a 

13 taxable year covering a period of less than 12 

14 months. 

15 ‘‘(3) CERTAIN RULES TO APPLY.—Rules similar 

16 to the following rules shall apply for purposes of this 

17 section: 

18 ‘‘(A) Section 219(d)(2) (relating to no de19 duction for rollovers). 

20 ‘‘(B) Section 219(f)(3) (relating to time 

21 when contributions deemed made). 

22 ‘‘(C) Section 219(f)(5) (relating to em23 ployer payments). 

24 ‘‘(D) Section 408(g) (relating to commu25 nity property laws). 


rfrederick on DSK6VPTVN1PROD with BILLS
12 

•S 1991 IS

1 ‘‘(E) Section 408(h) (relating to custodial 

2 accounts). 

3 ‘‘(F) Section 224(f)(7) (relating to transfer 

4 of account incident to divorce). 

5 ‘‘(G) Section 224(f)(8) (relating to treat6 ment after death of account beneficiary). 

7 ‘‘(4) COORDINATION WITH CASUALTY LOSS DE8 DUCTION.—No deduction shall be allowed under sec9 tion 165 for a loss for which a disaster recovery ex10 pense payment is made from a disaster savings ac11 count. 

12 ‘‘(i) REPORTS.—The Secretary may require the trust13 ee of a disaster savings account to make such reports re14 garding such account to the Secretary and to the account 

15 beneficiary with respect to contributions, distributions, the 

16 return of excess contributions, and such other matters as 

17 the Secretary determines appropriate.’’. 

18 (b) DEDUCTION ALLOWED WHETHER OR NOT INDI19 VIDUAL ITEMIZES OTHER DEDUCTIONS.—Subsection (a) 

20 of section 62 of such Code is amended by inserting after 

21 paragraph (21) the following new paragraph: 

22 ‘‘(22) DISASTER SAVINGS ACCOUNTS.—The de23 duction allowed by section 224.’’. 


rfrederick on DSK6VPTVN1PROD with BILLS
13 

•S 1991 IS

1 (c) TAX ON EXCESS CONTRIBUTIONS.—Section 4973 

2 of such Code (relating to tax on excess contributions to 

3 certain tax-favored accounts and annuities) is amended— 

4 (1) by striking ‘‘or’’ at the end of subsection 

5 (a)(4), by inserting ‘‘or’’ at the end of subsection 

6 (a)(5), and by inserting after subsection (a)(5) the 

7 following new paragraph: 

8 ‘‘(6) a disaster savings account (within the 

9 meaning of section 224(d)),’’, and 

10 (2) by adding at the end the following new sub11 section: 

12 ‘‘(h) EXCESS CONTRIBUTIONS TO DISASTER SAVINGS

13 ACCOUNTS.—For purposes of this section, in the case of 

14 disaster savings accounts (within the meaning of section 

15 224(d)), the term ‘excess contributions’ means the sum 

16 of— 

17 ‘‘(1) the aggregate amount contributed for the 

18 taxable year to the accounts (other than a rollover 

19 contribution described in section 224(f)(5)) which is 

20 not allowable as a deduction under section 224 for 

21 such year, and 

22 ‘‘(2) the amount determined under this sub23 section for the preceding taxable year, reduced by 

24 the sum of— 


rfrederick on DSK6VPTVN1PROD with BILLS
14 

•S 1991 IS

1 ‘‘(A) the distributions out of the accounts 

2 which were included in gross income under sec3 tion 224(f)(2), and 

4 ‘‘(B) the excess (if any) of— 

5 ‘‘(i) the maximum amount allowable 

6 as a deduction under section 224(b) for 

7 the taxable year, over 

8 ‘‘(ii) the amount contributed to the 

9 accounts for the taxable year. 

10 For purposes of this subsection, any contribu11 tion which is distributed out of the disaster sav12 ings account in a distribution to which section 

13 224(f)(3) applies shall be treated as an amount 

14 not contributed.’’. 

15 (d) FAILURE TO PROVIDE REPORTS ON DISASTER

16 SAVINGS ACCOUNTS.—Paragraph (2) of section 6693(a) 

17 of such Code (relating to reports) is amended by redesig18 nating subparagraphs (D) and (E) as subparagraphs (E) 

19 and (F), respectively, and by inserting after subparagraph 

20 (C) the following new subparagraph: 

21 ‘‘(D) section 224(i) (relating to disaster 

22 savings accounts),’’. 

23 (e) CLERICAL AMENDMENT.—The table of sections 

24 for part VII of subchapter B of chapter 1 of such Code 


rfrederick on DSK6VPTVN1PROD with BILLS
15 

•S 1991 IS

1 is amended by striking the last item and inserting the fol2 lowing: 

‘‘Sec. 224. Disaster savings accounts. 

‘‘Sec. 225. Cross reference.’’. 

3 (f) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 the date of the enactment of this Act. 

Æ 


rfrederick on DSK6VPTVN1PROD with BILLS