I 

116TH CONGRESS 

2D SESSION H. R. 8440 

To provide disaster tax relief. 

IN THE HOUSE OF REPRESENTATIVES 

SEPTEMBER 29, 2020 

Mr. THOMPSON of California (for himself, Mr. BLUMENAUER, and Ms. 

FINKENAUER) introduced the following bill; which was referred to the 

Committee on Ways and Means, and in addition to the Committee on 

Small Business, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned 

A BILL 

To provide disaster tax relief. 

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; TABLE OF CONTENTS. 

4 (a) SHORT TITLE.—This Act may be cited as the 

5 ‘‘Disaster Tax Relief Act of 2020’’. 

6 (b) TABLE OF CONTENTS.—The table of contents for 

7 this Act is as follows: 

Sec. 1. Short title; table of contents. 

Sec. 2. Definitions. 

Sec. 3. Special disaster-related rules for use of retirement funds. 

Sec. 4. Employee retention credit for employers affected by qualified disasters. 


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Sec. 5. Other disaster-related tax relief provisions. 

Sec. 6. Treatment of certain possessions. 

1 SEC. 2. DEFINITIONS. 

2 For purposes of this Act— 

3 (1) QUALIFIED DISASTER AREA.— 

4 (A) IN GENERAL.—The term ‘‘qualified 

5 disaster area’’ means any area with respect to 

6 which a major disaster was declared, during the 

7 period beginning on December 28, 2019, and 

8 ending on the date which is 60 days after the 

9 date of the enactment of this Act, by the Presi10 dent under section 401 of the Robert T. Staf11 ford Disaster Relief and Emergency Assistance 

12 Act if the incident period of the disaster with 

13 respect to which such declaration is made be14 gins on or before the date of the enactment of 

15 this Act. 

16 (B) COVID–19 EXCEPTION.—Such term 

17 shall not include any area with respect to which 

18 such a major disaster has been so declared only 

19 by reason of COVID–19. 

20 (2) QUALIFIED DISASTER ZONE.—The term 

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

22 qualified disaster area which was determined by the 

23 President, during the period beginning on December 

24 28, 2019, and ending on the date which is 60 days 


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1 after the date of the enactment of this Act, to war2 rant individual or individual and public assistance 

3 from the Federal Government under the Robert T. 

4 Stafford Disaster Relief and Emergency Assistance 

5 Act by reason of the qualified disaster with respect 

6 to such disaster area. 

7 (3) QUALIFIED DISASTER.—The term ‘‘quali8 fied disaster’’ means, with respect to any qualified 

9 disaster area, the disaster by reason of which a 

10 major disaster was declared with respect to such 

11 area. 

12 (4) INCIDENT PERIOD.—The term ‘‘incident pe13 riod’’ means, with respect to any qualified disaster, 

14 the period specified by the Federal Emergency Man15 agement Agency as the period during which such 

16 disaster occurred (except that for purposes of this 

17 Act such period shall not be treated as beginning be18 fore December 28, 2019, or ending after the date 

19 which is 30 days after the date of the enactment of 

20 this Act). 

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

22 RETIREMENT FUNDS. 

23 (a) TAX-FAVORED WITHDRAWALS FROM RETIRE24 MENT PLANS.— 


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

2 Revenue Code of 1986 shall not apply to any quali3 fied disaster distribution. 

4 (2) AGGREGATE DOLLAR LIMITATION.— 

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

6 subsection, the aggregate amount of distribu7 tions received by an individual which may be 

8 treated as qualified disaster distributions for 

9 any taxable year shall not exceed the excess (if 

10 any) of— 

11 (i) $100,000, over 

12 (ii) the aggregate amounts treated as 

13 qualified disaster distributions received by 

14 such individual for all prior taxable years. 

15 (B) TREATMENT OF PLAN DISTRIBU16 TIONS.—If a distribution to an individual would 

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

18 qualified disaster distribution, a plan shall not 

19 be treated as violating any requirement of the 

20 Internal Revenue Code of 1986 merely because 

21 the plan treats such distribution as a qualified 

22 disaster distribution, unless the aggregate 

23 amount of such distributions from all plans 

24 maintained by the employer (and any member 


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1 of any controlled group which includes the em2 ployer) to such individual exceeds $100,000. 

3 (C) CONTROLLED GROUP.—For purposes 

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

5 group’’ means any group treated as a single 

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

7 of section 414 of the Internal Revenue Code of 

8 1986. 

9 (D) SPECIAL RULE FOR INDIVIDUALS AF10 FECTED BY MORE THAN ONE DISASTER.—The 

11 limitation of subparagraph (A) shall be applied 

12 separately with respect to distributions made 

13 with respect to each qualified disaster. 

14 (3) AMOUNT DISTRIBUTED MAY BE REPAID.— 

15 (A) IN GENERAL.—Any individual who re16 ceives a qualified disaster distribution may, at 

17 any time during the 3-year period beginning on 

18 the day after the date on which such distribu19 tion was received, make 1 or more contributions 

20 in an aggregate amount not to exceed the 

21 amount of such distribution to an eligible retire22 ment plan of which such individual is a bene23 ficiary and to which a rollover contribution of 

24 such distribution could be made under section 

25 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or 


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1 457(e)(16), of the Internal Revenue Code of 

2 1986, as the case may be. 

3 (B) TREATMENT OF REPAYMENTS OF DIS4 TRIBUTIONS FROM ELIGIBLE RETIREMENT

5 PLANS OTHER THAN IRAS.—For purposes of 

6 the Internal Revenue Code of 1986, if a con7 tribution is made pursuant to subparagraph (A) 

8 with respect to a qualified disaster distribution 

9 from an eligible retirement plan other than an 

10 individual retirement plan, then the taxpayer 

11 shall, to the extent of the amount of the con12 tribution, be treated as having received the 

13 qualified disaster distribution in an eligible roll14 over distribution (as defined in section 

15 402(c)(4) of such Code) and as having trans16 ferred the amount to the eligible retirement 

17 plan in a direct trustee to trustee transfer with18 in 60 days of the distribution. 

19 (C) TREATMENT OF REPAYMENTS OF DIS20 TRIBUTIONS FROM IRAS.—For purposes of the 

21 Internal Revenue Code of 1986, if a contribu22 tion is made pursuant to subparagraph (A) 

23 with respect to a qualified disaster distribution 

24 from an individual retirement plan (as defined 

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


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1 the extent of the amount of the contribution, 

2 the qualified disaster distribution shall be treat3 ed as a distribution described in section 

4 408(d)(3) of such Code and as having been 

5 transferred to the eligible retirement plan in a 

6 direct trustee to trustee transfer within 60 days 

7 of the distribution. 

8 (4) DEFINITIONS.—For purposes of this sub9 section— 

10 (A) QUALIFIED DISASTER DISTRIBU11 TION.—Except as provided in paragraph (2), 

12 the term ‘‘qualified disaster distribution’’ means 

13 any distribution from an eligible retirement 

14 plan made— 

15 (i) on or after the first day of the in16 cident period of a qualified disaster and 

17 before the date which is 180 days after the 

18 date of the enactment of this Act, and 

19 (ii) to an individual whose principal 

20 place of abode at any time during the inci21 dent period of such qualified disaster is lo22 cated in the qualified disaster area with re23 spect to such qualified disaster and who 

24 has sustained an economic loss by reason 

25 of such qualified disaster. 


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1 (B) ELIGIBLE RETIREMENT PLAN.—The 

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

3 meaning given such term by section 

4 402(c)(8)(B) of the Internal Revenue Code of 

5 1986. 

6 (5) INCOME INCLUSION SPREAD OVER 3-YEAR

7 PERIOD.— 

8 (A) IN GENERAL.—In the case of any 

9 qualified disaster distribution, unless the tax10 payer elects not to have this paragraph apply 

11 for any taxable year, any amount required to be 

12 included in gross income for such taxable year 

13 shall be so included ratably over the 3-taxable14 year period beginning with such taxable year. 

15 (B) SPECIAL RULE.—For purposes of sub16 paragraph (A), rules similar to the rules of sub17 paragraph (E) of section 408A(d)(3) of the In18 ternal Revenue Code of 1986 shall apply. 

19 (6) SPECIAL RULES.— 

20 (A) EXEMPTION OF DISTRIBUTIONS FROM

21 TRUSTEE TO TRUSTEE TRANSFER AND WITH22 HOLDING RULES.—For purposes of sections 

23 401(a)(31), 402(f), and 3405 of the Internal 

24 Revenue Code of 1986, qualified disaster disVerDate Sep 11 2014 20:35 Oct 24, 2020 Jkt 019200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H8440.IH H8440

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1 tributions shall not be treated as eligible roll2 over distributions. 

3 (B) QUALIFIED DISASTER DISTRIBUTIONS

4 TREATED AS MEETING PLAN DISTRIBUTION RE5 QUIREMENTS.—For purposes the Internal Rev6 enue Code of 1986, a qualified disaster dis7 tribution shall be treated as meeting the re8 quirements of sections 401(k)(2)(B)(i), 

9 403(b)(7)(A)(ii), 403(b)(11), and 457(d)(1)(A) 

10 of such Code. 

11 (b) RECONTRIBUTIONS OF WITHDRAWALS FOR

12 HOME PURCHASES.— 

13 (1) RECONTRIBUTIONS.— 

14 (A) IN GENERAL.—Any individual who re15 ceived a qualified distribution may, during the 

16 applicable period, make 1 or more contributions 

17 in an aggregate amount not to exceed the 

18 amount of such qualified distribution to an eli19 gible retirement plan (as defined in section 

20 402(c)(8)(B) of the Internal Revenue Code of 

21 1986) of which such individual is a beneficiary 

22 and to which a rollover contribution of such dis23 tribution could be made under section 402(c), 

24 403(a)(4), 403(b)(8), or 408(d)(3), of such 

25 Code, as the case may be. 


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1 (B) TREATMENT OF REPAYMENTS.—Rules 

2 similar to the rules of subparagraphs (B) and 

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

4 of this subsection. 

5 (2) QUALIFIED DISTRIBUTION.—For purposes 

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

7 means any distribution— 

8 (A) described in section 

9 401(k)(2)(B)(i)(IV), 403(b)(7)(A)(ii) (but only 

10 to the extent such distribution relates to finan11 cial hardship), 403(b)(11)(B), or 72(t)(2)(F), 

12 of the Internal Revenue Code of 1986, 

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

14 construct a principal residence in a qualified 

15 disaster area, but which was not so used on ac16 count of the qualified disaster with respect to 

17 such area, and 

18 (C) which was received during the period 

19 beginning on the date which is 180 days before 

20 the first day of the incident period of such 

21 qualified disaster and ending on the date which 

22 is 30 days after the last day of such incident 

23 period. 

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

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


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1 the case of a principal residence in a qualified dis2 aster area with respect to any qualified disaster, the 

3 period beginning on the first day of the incident pe4 riod of such qualified disaster and ending on the 

5 date which is 180 days after the date of the enact6 ment of this Act. 

7 (c) LOANS FROM QUALIFIED PLANS.— 

8 (1) INCREASE IN LIMIT ON LOANS NOT TREAT9 ED AS DISTRIBUTIONS.—In the case of any loan 

10 from a qualified employer plan (as defined under 

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

12 1986) to a qualified individual made during the 180- 

13 day period beginning on the date of the enactment 

14 of this Act— 

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

16 such Code shall be applied by substituting 

17 ‘‘$100,000’’ for ‘‘$50,000’’, and 

18 (B) clause (ii) of such section shall be ap19 plied by substituting ‘‘the present value of the 

20 nonforfeitable accrued benefit of the employee 

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

22 value of the nonforfeitable accrued benefit of 

23 the employee under the plan’’. 

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

25 qualified individual (with respect to any qualified 


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

2 first day of the incident period of such qualified dis3 aster) from a qualified employer plan (as defined in 

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

5 1986)— 

6 (A) if the due date pursuant to subpara7 graph (B) or (C) of section 72(p)(2) of such 

8 Code for any repayment with respect to such 

9 loan occurs during the period beginning on the 

10 first day of the incident period of such qualified 

11 disaster and ending on the date which is 180 

12 days after the last day of such incident period, 

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

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

15 the date of the enactment of this Act), 

16 (B) any subsequent repayments with re17 spect to any such loan shall be appropriately 

18 adjusted to reflect the delay in the due date 

19 under subparagraph (A) and any interest accru20 ing during such delay, and 

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

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

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

24 described in subparagraph (A) of this para25 graph shall be disregarded. 


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1 (3) QUALIFIED INDIVIDUAL.—For purposes of 

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

3 means any individual— 

4 (A) whose principal place of abode at any 

5 time during the incident period of any qualified 

6 disaster is located in the qualified disaster area 

7 with respect to such qualified disaster, and 

8 (B) who has sustained an economic loss by 

9 reason of such qualified disaster. 

10 (d) PROVISIONS RELATING TO PLAN AMEND11 MENTS.— 

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

13 any amendment to any plan or annuity contract, 

14 such plan or contract shall be treated as being oper15 ated in accordance with the terms of the plan during 

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

17 (2) AMENDMENTS TO WHICH SUBSECTION AP18 PLIES.— 

19 (A) IN GENERAL.—This subsection shall 

20 apply to any amendment to any plan or annuity 

21 contract which is made— 

22 (i) pursuant to any provision of this 

23 section, or pursuant to any regulation 

24 issued by the Secretary or the Secretary of 


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1 Labor under any provision of this section, 

2 and 

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

4 first plan year beginning on or after Janu5 ary 1, 2020, or such later date as the Sec6 retary may prescribe. 

7 In the case of a governmental plan (as defined 

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

9 of 1986), clause (ii) shall be applied by sub10 stituting the date which is 2 years after the 

11 date otherwise applied under clause (ii). 

12 (B) CONDITIONS.—This subsection shall 

13 not apply to any amendment unless— 

14 (i) during the period— 

15 (I) beginning on the date that 

16 this section or the regulation de17 scribed in subparagraph (A)(i) takes 

18 effect (or in the case of a plan or con19 tract amendment not required by this 

20 section or such regulation, the effec21 tive date specified by the plan), and 

22 (II) ending on the date described 

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

24 the date the plan or contract amend25 ment is adopted), 


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1 the plan or contract is operated as if such plan 

2 or contract amendment were in effect, and 

3 (ii) such plan or contract amendment 

4 applies retroactively for such period. 

5 SEC. 4. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS 

6 AFFECTED BY QUALIFIED DISASTERS. 

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

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

9 employer, the 2020 qualified disaster employee retention 

10 credit shall be treated as a credit listed at the end of sub11 section (b) of such section. For purposes of this sub12 section, the 2020 qualified disaster employee retention 

13 credit for any taxable year is an amount equal to 40 per14 cent of the qualified wages with respect to each eligible 

15 employee of such employer for such taxable year. The 

16 amount of qualified wages with respect to any employee 

17 which may be taken into account under this subsection 

18 by the employer for any taxable year shall not exceed 

19 $6,000 (reduced by the amount of qualified wages with 

20 respect to such employee which may be so taken into ac21 count for any prior taxable year). 

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

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

24 employer’’ means any employer— 


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1 (A) which conducted an active trade or 

2 business in a qualified disaster zone at any time 

3 during the incident period of the qualified dis4 aster with respect to such qualified disaster 

5 zone, and 

6 (B) with respect to whom the trade or 

7 business described in subparagraph (A) is inop8 erable at any time during the period beginning 

9 on the first day of the incident period of such 

10 qualified disaster and ending on the date of the 

11 enactment of this Act, as a result of damage 

12 sustained by reason of such qualified disaster. 

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

14 employee’’ means with respect to an eligible em15 ployer an employee whose principal place of employ16 ment with such eligible employer (determined imme17 diately before the qualified disaster referred to in 

18 paragraph (1)) was in the qualified disaster zone re19 ferred to in such paragraph. 

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

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

22 of the Internal Revenue Code of 1986, but without 

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

24 or incurred by an eligible employer with respect to 

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


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1 on which the trade or business described in para2 graph (1) first became inoperable at the principal 

3 place of employment of the employee (determined 

4 immediately before the qualified disaster referred to 

5 in such paragraph) and before the earlier of— 

6 (A) the date on which such trade or busi7 ness has resumed significant operations at such 

8 principal place of employment, or 

9 (B) the date which 150 days after the last 

10 day of the incident period of the qualified dis11 aster referred to in paragraph (1). 

12 Such term shall include wages paid without regard 

13 to whether the employee performs no services, per14 forms services at a different place of employment 

15 than such principal place of employment, or per16 forms services at such principal place of employment 

17 before significant operations have resumed. Such 

18 term shall not include any wages taken into account 

19 under section 2301 of the Coronavirus Aid, Relief, 

20 and Economic Security Act. 

21 (c) SPECIAL RULES.— 

22 (1) EMPLOYEE NOT TAKEN INTO ACCOUNT

23 MORE THAN ONCE.—An employee shall not be treat24 ed as an eligible employee for purposes of this sub25 section for any period with respect to any employer 


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1 if such employer is allowed a credit under section 51 

2 of the Internal Revenue Code of 1986 with respect 

3 to such employee for such period. 

4 (2) DENIAL OF DOUBLE BENEFIT.—Any wages 

5 taken into account in determining the credit allowed 

6 under this section shall not be taken into account as 

7 wages for purposes of sections 41, 45A, 45P, 45S, 

8 51, and 1396 of the Internal Revenue Code of 1986. 

9 (3) CERTAIN OTHER RULES TO APPLY.—For 

10 purposes of this subsection, rules similar to the rules 

11 of sections 51(i)(1), 52, and 280C(a), of the Internal 

12 Revenue Code of 1986, shall apply. 

13 (d) ELECTION TO NOT TAKE CERTAIN WAGES INTO

14 ACCOUNT.— 

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

16 to qualified wages paid by an eligible employer with 

17 respect to which such employer makes an election 

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

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

20 wages. 

21 (2) COORDINATION WITH PAYCHECK PROTEC22 TION PROGRAM.—The Secretary, in consultation 

23 with the Administrator of the Small Business Ad24 ministration, shall issue guidance providing that 

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1 riod shall not fail to be treated as qualified wages 

2 under this section by reason of an election under 

3 paragraph (1) to the extent that a covered loan of 

4 the eligible employer is not forgiven by reason of a 

5 decision under section 1106(g) of the CARES Act. 

6 Terms used in the preceding sentence which are also 

7 used in section 1106 of such Act shall have the same 

8 meaning as when used in such section. 

9 (e) AMENDMENT TO PAYCHECK PROTECTION PRO10 GRAM.—Section 1106(a)(8) of the CARES Act is amended 

11 by inserting ‘‘, except that such costs shall not include 

12 qualified wages taken into account in determining the 

13 credit allowed under section 4 of the Disaster Tax Relief 

14 Act of 2020’’ before the period at the end. 

15 SEC. 5. OTHER DISASTER-RELATED TAX RELIEF PROVI16 SIONS. 

17 (a) SPECIAL RULES FOR QUALIFIED DISASTER RE18 LIEF CONTRIBUTIONS.— 

19 (1) IN GENERAL.—In the case of a qualified 

20 disaster relief contribution made by a corporation— 

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

22 Act shall be applied first to qualified contribu23 tions without regard to any qualified disaster 

24 relief contributions and then separately to such 

25 qualified disaster relief contribution, and 


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1 (B) in applying such section to such quali2 fied disaster relief contributions, clause (i) 

3 thereof shall be applied— 

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

5 ‘‘25 percent’’, and 

6 (ii) by treating qualified contributions 

7 other than qualified disaster relief con8 tributions as contributions allowed under 

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

10 Code of 1986. 

11 (2) QUALIFIED DISASTER RELIEF CONTRIBU12 TION.—For purposes of this subsection, the term 

13 ‘‘qualified disaster relief contribution’’ means any 

14 qualified contribution (as defined in section 

15 2205(a)(3) of the CARES Act) if— 

16 (A) such contribution— 

17 (i) is paid, during the period begin18 ning on December 28, 2019, and ending 

19 on the date which is 60 days after the date 

20 of the enactment of this Act, and 

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

22 more qualified disaster areas, 

23 (B) the taxpayer obtains from such organi24 zation contemporaneous written acknowledg25 ment (within the meaning of section 170(f)(8) 


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1 of such Code) that such contribution was used 

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

3 subparagraph (A)(ii), and 

4 (C) the taxpayer has elected the applica5 tion of this subsection with respect to such con6 tribution. 

7 (3) CROSS-REFERENCE.—For the suspension of 

8 the limitation on qualified disaster relief contribu9 tions made by an individual during 2020, see section 

10 2205(a) of the CARES Act. 

11 (b) SPECIAL RULES FOR QUALIFIED DISASTER-RE12 LATED PERSONAL CASUALTY LOSSES.— 

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

14 disaster loss for any taxable year— 

15 (A) the amount determined under section 

16 165(h)(2)(A)(ii) of the Internal Revenue Code 

17 of 1986 shall be equal to the sum of— 

18 (i) such net disaster loss, and 

19 (ii) so much of the excess referred to 

20 in the matter preceding clause (i) of sec21 tion 165(h)(2)(A) of such Code (reduced 

22 by the amount in clause (i) of this sub23 paragraph) as exceeds 10 percent of the 

24 adjusted gross income of the individual, 


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1 (B) in the case of qualified disaster-related 

2 personal casualty losses, section 165(h)(1) of 

3 such Code shall be applied to by substituting 

4 ‘‘$500’’ for ‘‘$500 ($100 for taxable years be5 ginning after December 31, 2009)’’, 

6 (C) the standard deduction determined 

7 under section 63(c) of such Code shall be in8 creased by the net disaster loss, and 

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

10 not apply to so much of the standard deduction 

11 as is attributable to the increase under sub12 paragraph (C) of this paragraph. 

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

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

15 excess of qualified disaster-related personal casualty 

16 losses over personal casualty gains (as defined in 

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

18 of 1986). 

19 (3) QUALIFIED DISASTER-RELATED PERSONAL

20 CASUALTY LOSSES.—For purposes of this sub21 section, the term ‘‘qualified disaster-related personal 

22 casualty losses’’ means losses described in section 

23 165(c)(3) of the Internal Revenue Code of 1986 

24 which arise in a qualified disaster area on or after 

25 the first day of the incident period of the qualified 


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1 disaster to which such area relates, and which are 

2 attributable to such qualified disaster. 

3 (c) TEMPORARY SPECIAL RULE FOR DETERMINING

4 EARNED INCOME FOR TAXPAYERS WHOSE INCOME WAS

5 AFFECTED BY COVID–19 DISASTER.— 

6 (1) IN GENERAL.—If the earned income of the 

7 taxpayer for the taxpayer’s first taxable year begin8 ning in 2020 is less than the earned income of the 

9 taxpayer for the preceding taxable year, the credits 

10 allowed under sections 24(d) and 32 of the Internal 

11 Revenue Code of 1986 may, at the election of the 

12 taxpayer, be determined by substituting— 

13 (A) such earned income for the preceding 

14 taxable year, for 

15 (B) such earned income for the taxpayer’s 

16 first taxable year beginning in 2020. 

17 (2) EARNED INCOME.— 

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

19 section, the term ‘‘earned income’’ has the 

20 meaning given such term under section 32(c) of 

21 the Internal Revenue Code of 1986. 

22 (B) APPLICATION TO JOINT RETURNS.— 

23 For purposes of subsection (a), in the case of 

24 a joint return, the earned income of the tax25 payer for the preceding taxable year shall be 


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1 the sum of the earned income of each spouse 

2 for such preceding taxable year. 

3 (3) SPECIAL RULES.— 

4 (A) ERRORS TREATED AS MATHEMATICAL

5 ERROR.—For purposes of section 6213 of the 

6 Internal Revenue Code of 1986, an incorrect 

7 use on a return of earned income pursuant to 

8 subsection (a) shall be treated as a mathe9 matical or clerical error. 

10 (B) NO EFFECT ON DETERMINATION OF

11 GROSS INCOME, ETC.—Except as otherwise pro12 vided in this subsection, the Internal Revenue 

13 Code of 1986 shall be applied without regard to 

14 any substitution under subsection (a). 

15 SEC. 6. TREATMENT OF CERTAIN POSSESSIONS. 

16 (a) PAYMENTS TO POSSESSIONS WITH MIRROR

17 CODE TAX SYSTEMS.—The Secretary of the Treasury 

18 shall pay to each possession of the United States which 

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

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

21 of the provisions of this Act. Such amounts shall be deter22 mined by the Secretary of the Treasury based on informa23 tion provided by the government of the respective posses24 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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