I 

113TH CONGRESS 

1ST SESSION H. R. 549 

To amend the Internal Revenue Code of 1986 to provide for the creation 

of policyholder disaster protection funds, Catastrophe Savings Accounts, 

and tax credits for natural disaster mitigation expenditures. 

IN THE HOUSE OF REPRESENTATIVES 

FEBRUARY 6, 2013 

Mr. GRIMM (for himself, Mr. PASCRELL, Mr. ROONEY, and Mr. DEUTCH) introduced the following bill; which was referred to the Committee on Ways 

and Means 

A BILL 

To amend the Internal Revenue Code of 1986 to provide 

for the creation of policyholder disaster protection funds, 

Catastrophe Savings Accounts, and tax credits for natural disaster mitigation expenditures. 

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 ‘‘Homeowner Catas5 trophe Protection Act of 2013’’. 


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1 TITLE I—POLICYHOLDER 

2 DISASTER PROTECTION FUNDS 

3 SEC. 101. FINDINGS. 

4 The Congress makes the following findings: 

5 (1) Rising costs resulting from natural disasters 

6 are placing an increasing strain on the ability of 

7 property and casualty insurance companies to assure 

8 payment of homeowners’ claims and other insurance 

9 claims arising from major natural disasters now and 

10 in the future. 

11 (2) Present tax laws do not provide adequate 

12 incentives to assure that natural disaster insurance 

13 is provided or, where such insurance is provided, 

14 that funds are available for payment of insurance 

15 claims in the event of future catastrophic losses from 

16 major natural disasters, as present law requires an 

17 insurer wishing to accumulate surplus assets for this 

18 purpose to do so entirely from its after-tax retained 

19 earnings. 

20 (3) Revising the tax laws applicable to the prop21 erty and casualty insurance industry to permit care22 fully controlled accumulation of pretax dollars in 

23 separate reserve funds devoted solely to the payment 

24 of claims arising from future major natural disasters 

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1 surers to make natural disaster insurance available, 

2 will give greater protection to the Nation’s home3 owners, small businesses, and other insurance con4 sumers, and will help assure the future financial 

5 health of the Nation’s insurance system as a whole. 

6 (4) Implementing these changes will reduce the 

7 possibility that a significant portion of the private 

8 insurance system would fail in the wake of a major 

9 natural disaster and that governmental entities 

10 would be required to step in to provide relief at tax11 payer expense. 

12 SEC. 3. CREATION OF POLICYHOLDER DISASTER PROTEC13 TION FUNDS; CONTRIBUTIONS TO AND DIS14 TRIBUTIONS FROM FUNDS; OTHER RULES. 

15 (a) CONTRIBUTIONS TO POLICYHOLDER DISASTER

16 PROTECTION FUNDS.—Subsection (c) of section 832 of 

17 the Internal Revenue Code of 1986 (relating to the taxable 

18 income of insurance companies other than life insurance 

19 companies) is amended by striking ‘‘and’’ at the end of 

20 paragraph (12), by striking the period at the end of para21 graph (13) and inserting ‘‘; and’’, and by adding at the 

22 end the following new paragraph: 

23 ‘‘(14) the qualified contributions to a policy24 holder disaster protection fund during the taxable 

25 year.’’. 


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1 (b) DISTRIBUTIONS FROM POLICYHOLDER DISASTER

2 PROTECTION FUNDS.—Paragraph (1) of section 832(b) of 

3 such Code is amended by striking ‘‘and’’ at the end of 

4 subparagraph (D), by striking the period at the end of 

5 subparagraph (E) and inserting ‘‘, and’’, and by adding 

6 at the end the following new subparagraph: 

7 ‘‘(F) the amount of any distributions from 

8 a policyholder disaster protection fund during 

9 the taxable year, except that a distribution 

10 made to return to the qualified insurance com11 pany any contribution which is not a qualified 

12 contribution (as defined in subsection (h)) for a 

13 taxable year shall not be included in gross in14 come if such distribution is made prior to the 

15 filing of the tax return for such taxable year.’’. 

16 (c) DEFINITIONS AND OTHER RULES RELATING TO

17 POLICYHOLDER DISASTER PROTECTION FUNDS.—Section 

18 832 of such Code (relating to insurance company taxable 

19 income) is amended by adding at the end the following 

20 new subsection: 

21 ‘‘(h) DEFINITIONS AND OTHER RULES RELATING TO

22 POLICYHOLDER DISASTER PROTECTION FUNDS.—For 

23 purposes of this section— 

24 ‘‘(1) POLICYHOLDER DISASTER PROTECTION

25 FUND.—The term ‘policyholder disaster protection 


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1 fund’ (hereafter in this subsection referred to as the 

2 ‘fund’) means any custodial account, trust, or any 

3 other arrangement or account— 

4 ‘‘(A) which is established to hold assets 

5 that are set aside solely for the payment of 

6 qualified losses, and 

7 ‘‘(B) under the terms of which— 

8 ‘‘(i) the assets in the fund are re9 quired to be invested in a manner con10 sistent with the investment requirements 

11 applicable to the qualified insurance com12 pany under the laws of its jurisdiction of 

13 domicile, 

14 ‘‘(ii) the net income for the taxable 

15 year derived from the assets in the fund is 

16 required to be distributed no less fre17 quently than annually, 

18 ‘‘(iii) an excess balance drawdown 

19 amount is required to be distributed to the 

20 qualified insurance company no later than 

21 the close of the taxable year following the 

22 taxable year for which such amount is de23 termined, 

24 ‘‘(iv) a catastrophe drawdown amount 

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1 ance company if distributed prior to the 

2 close of the taxable year following the year 

3 for which such amount is determined, 

4 ‘‘(v) a State required drawdown 

5 amount may be distributed, and 

6 ‘‘(vi) no distributions from the fund 

7 are required or permitted other than the 

8 distributions described in clauses (ii) 

9 through (v) and the return to the qualified 

10 insurance company of contributions that 

11 are not qualified contributions. 

12 ‘‘(2) QUALIFIED INSURANCE COMPANY.—The 

13 term ‘qualified insurance company’ means any insur14 ance company subject to tax under section 831(a). 

15 ‘‘(3) QUALIFIED CONTRIBUTION.—The term 

16 ‘qualified contribution’ means a contribution to a 

17 fund for a taxable year to the extent that the 

18 amount of such contribution, when added to the pre19 vious contributions to the fund for such taxable 

20 year, does not exceed the excess of— 

21 ‘‘(A) the fund cap for the taxable year, 

22 over 

23 ‘‘(B) the fund balance determined as of the 

24 close of the preceding taxable year. 


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1 ‘‘(4) EXCESS BALANCE DRAWDOWN

2 AMOUNTS.—The term ‘excess balance drawdown 

3 amount’ means the excess (if any) of— 

4 ‘‘(A) the fund balance as of the close of 

5 the taxable year, over 

6 ‘‘(B) the fund cap for the following taxable 

7 year. 

8 ‘‘(5) CATASTROPHE DRAWDOWN AMOUNT.— 

9 ‘‘(A) IN GENERAL.—The term ‘catastrophe 

10 drawdown amount’ means an amount that does 

11 not exceed the lesser of the amount determined 

12 under subparagraph (B) or (C). 

13 ‘‘(B) NET LOSSES FROM QUALIFYING

14 EVENTS.—The amount determined under this 

15 subparagraph shall be equal to the qualified 

16 losses for the taxable year determined without 

17 regard to clause (ii) of paragraph (8)(A). 

18 ‘‘(C) GROSS LOSSES IN EXCESS OF

19 THRESHOLD.—The amount determined under 

20 this subparagraph shall be equal to the excess 

21 (if any) of— 

22 ‘‘(i) the qualified losses for the taxable 

23 year, over 

24 ‘‘(ii) the lesser of— 


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1 ‘‘(I) the fund cap for the taxable 

2 year (determined without regard to 

3 paragraph (9)(E)), or 

4 ‘‘(II) 30 percent of the qualified 

5 insurance company’s surplus as re6 gards policyholders as shown on the 

7 company’s annual statement for the 

8 calendar year preceding the taxable 

9 year. 

10 ‘‘(D) SPECIAL DRAWDOWN AMOUNT FOL11 LOWING A RECENT CATASTROPHE LOSS

12 YEAR.—If for any taxable year included in the 

13 reference period the qualified losses exceed the 

14 amount determined under subparagraph (C)(ii), 

15 the ‘catastrophe drawdown amount’ shall be an 

16 amount that does not exceed the lesser of the 

17 amount determined under subparagraph (B) or 

18 the amount determined under this subpara19 graph. The amount determined under this sub20 paragraph shall be an amount equal to the ex21 cess (if any) of— 

22 ‘‘(i) the qualified losses for the taxable 

23 year, over 

24 ‘‘(ii) the lesser of— 


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‘‘(I) 1 1 ⁄3 of the fund cap for the 

2 taxable year (determined without re3 gard to paragraph (9)(E)), or 

4 ‘‘(II) 10 percent of the qualified 

5 insurance company’s surplus as re6 gards policyholders as shown on the 

7 company’s annual statement for the 

8 calendar year preceding the taxable 

9 year. 

10 ‘‘(E) REFERENCE PERIOD.—For purposes 

11 of subparagraph (D), the reference period shall 

12 be determined under the following table: 

‘‘For a taxable year The reference period 

beginning in— shall be— 

2015 and later ........................... The 3 preceding taxable years. 

2014 ........................................... The 2 preceding taxable years. 

2013 ........................................... The preceding taxable year. 

2012 or before ........................... No reference period applies. 

13 ‘‘(6) STATE REQUIRED DRAWDOWN AMOUNT.— 

14 The term ‘State required drawdown amount’ means 

15 any amount that the department of insurance for 

16 the qualified insurance company’s jurisdiction of 

17 domicile requires to be distributed from the fund, to 

18 the extent such amount is not otherwise described in 

19 paragraph (4) or (5). 

20 ‘‘(7) FUND BALANCE.—The term ‘fund balance’ 

21 means— 


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1 ‘‘(A) the sum of all qualified contributions 

2 to the fund, 

3 ‘‘(B) less any net investment loss of the 

4 fund for any taxable year or years, and 

5 ‘‘(C) less the sum of all distributions under 

6 clauses (iii) through (v) of paragraph (1)(B). 

7 ‘‘(8) QUALIFIED LOSSES.— 

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

9 losses’ means, with respect to a taxable year— 

10 ‘‘(i) the amount of losses and loss ad11 justment expenses incurred in the qualified 

12 lines of business specified in paragraph 

13 (9), net of reinsurance, as reported in the 

14 qualified insurance company’s annual 

15 statement for the taxable year, that are at16 tributable to one or more qualifying events 

17 (regardless of when such qualifying events 

18 occurred), 

19 ‘‘(ii) the amount by which such losses 

20 and loss adjustment expenses attributable 

21 to such qualifying events have been re22 duced for reinsurance received and recover23 able, plus 

24 ‘‘(iii) any nonrecoverable assessments, 

25 surcharges, or other liabilities that are 


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1 borne by the qualified insurance company 

2 and are attributable to such qualifying 

3 events. 

4 ‘‘(B) QUALIFYING EVENT.—For purposes 

5 of subparagraph (A), the term ‘qualifying event’ 

6 means any event that satisfies clauses (i) and 

7 (ii). 

8 ‘‘(i) EVENT.—An event satisfies this 

9 clause if the event is 1 or more of the fol10 lowing: 

11 ‘‘(I) Windstorm (hurricane, cy12 clone, or tornado). 

13 ‘‘(II) Earthquake (including any 

14 fire following). 

15 ‘‘(III) Winter catastrophe (snow, 

16 ice, or freezing). 

17 ‘‘(IV) Fire. 

18 ‘‘(V) Tsunami. 

19 ‘‘(VI) Flood. 

20 ‘‘(VII) Volcanic eruption. 

21 ‘‘(VIII) Hail. 

22 ‘‘(ii) CATASTROPHE DESIGNATION.— 

23 An event satisfies this clause if the event— 


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1 ‘‘(I) is designated a catastrophe 

2 by Property Claim Services or its suc3 cessor organization, 

4 ‘‘(II) is declared by the President 

5 to be an emergency or disaster, or 

6 ‘‘(III) is declared to be an emer7 gency or disaster in a similar declara8 tion by the chief executive official of a 

9 State, possession, or territory of the 

10 United States, or the District of Co11 lumbia. 

12 ‘‘(9) FUND CAP.— 

13 ‘‘(A) IN GENERAL.—The term ‘fund cap’ 

14 for a taxable year is the sum of the separate 

15 lines of business caps for each of the qualified 

16 lines of business specified in the table contained 

17 in subparagraph (C) (as modified under sub18 paragraphs (D) and (E)). 

19 ‘‘(B) SEPARATE LINES OF BUSINESS

20 CAP.—For purposes of subparagraph (A), the 

21 separate lines of business cap, with respect to 

22 a qualified line of business specified in the table 

23 contained in subparagraph (C), is the product 

24 of— 


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1 ‘‘(i) net written premiums reported in 

2 the annual statement for the calendar year 

3 preceding the taxable year in such line of 

4 business, multiplied by 

5 ‘‘(ii) the fund cap multiplier applica6 ble to such qualified line of business. 

7 ‘‘(C) QUALIFIED LINES OF BUSINESS AND

8 THEIR RESPECTIVE FUND CAP MULTIPLIERS.— 

9 For purposes of this paragraph, the qualified 

10 lines of business and fund cap multipliers speci11 fied in this subparagraph are those specified in 

12 the following table: 

‘‘Line of Business on Annual Fund Cap 

Statement Blank: Multiplier: 

Fire ................................................................................... 0.25

Allied ................................................................................. 1.25

Farmowners Multiple Peril ............................................... 0.25

Homeowners Multiple Peril .............................................. 0.75

Commercial Multi Peril (non-liability portion) ................. 0.50

Earthquake ....................................................................... 13.00

Inland Marine ................................................................... 0.25. 

13 ‘‘(D) SUBSEQUENT MODIFICATIONS OF

14 THE ANNUAL STATEMENT BLANK.—If, with re15 spect to any taxable year beginning after the ef16 fective date of this subsection, the annual state17 ment blank required to be filed is amended to 

18 replace, combine, or otherwise modify any of 

19 the qualified lines of business specified in sub20 paragraph (C), then for such taxable year sub21 paragraph (C) shall be applied in a manner 


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1 such that the fund cap shall be the same 

2 amount as if such reporting modification had 

3 not been made. 

4 ‘‘(E) 20-YEAR PHASE-IN.—Notwith5 standing subparagraph (C), the fund cap for a 

6 taxable year shall be the amount determined 

7 under subparagraph (C), as adjusted pursuant 

8 to subparagraph (D) (if applicable), multiplied 

9 by the phase-in percentage indicated in the fol10 lowing table: 

‘‘Taxable year beginning in: 

Phase-in percentage 

to be applied 

to fund cap 

computed 

under subparagraphs 

(A) and (B): 

2012 ........................................................................... 5 percent

2013 ........................................................................... 10 percent

2014 ........................................................................... 15 percent

2015 ........................................................................... 20 percent

2016 ........................................................................... 25 percent

2017 ........................................................................... 30 percent

2018 ........................................................................... 35 percent

2019 ........................................................................... 40 percent

2020 ........................................................................... 45 percent

2021 ........................................................................... 50 percent

2022 ........................................................................... 55 percent

2023 ........................................................................... 60 percent

2024 ........................................................................... 65 percent

2025 ........................................................................... 70 percent

2026 ........................................................................... 75 percent

2027 ........................................................................... 80 percent

2028 ........................................................................... 85 percent

2029 ........................................................................... 90 percent

2030 ........................................................................... 95 percent

2031 and later ............................................................ 100 percent. 

11 ‘‘(10) TREATMENT OF INVESTMENT INCOME

12 AND GAIN OR LOSS.— 

13 ‘‘(A) CONTRIBUTIONS IN KIND.—A trans14 fer of property other than money to a fund 


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1 shall be treated as a sale or exchange of such 

2 property for an amount equal to its fair market 

3 value as of the date of transfer, and appro4 priate adjustment shall be made to the basis of 

5 such property. Section 267 shall apply to any 

6 loss realized upon such a transfer. 

7 ‘‘(B) DISTRIBUTIONS IN KIND.—A transfer 

8 of property other than money by a fund to the 

9 qualified insurance company shall not be treat10 ed as a sale or exchange or other disposition of 

11 such property. The basis of such property im12 mediately after such transfer shall be the great13 er of the basis of such property immediately be14 fore such transfer or the fair market value of 

15 such property on the date of such transfer. 

16 ‘‘(C) INCOME WITH RESPECT TO FUND AS17 SETS.—Items of income of the type described in 

18 paragraphs (1)(B), (1)(C), and (2) of sub19 section (b) that are derived from the assets held 

20 in a fund, as well as losses from the sale or 

21 other disposition of such assets, shall be consid22 ered items of income, gain, or loss of the quali23 fied insurance company. Notwithstanding para24 graph (1)(F) of subsection (b), distributions of 

25 net income to the qualified insurance company 


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1 pursuant to paragraph (1)(B)(ii) of this sub2 section shall not cause such income to be taken 

3 into account a second time. 

4 ‘‘(11) NET INCOME; NET INVESTMENT LOSS.— 

5 For purposes of paragraph (1)(B)(ii), the net in6 come derived from the assets in the fund for the tax7 able year shall be the items of income and gain for 

8 the taxable year, less the items of loss for the tax9 able year, derived from such assets, as described in 

10 paragraph (10)(C). For purposes of paragraph (7), 

11 there is a net investment loss for the taxable year 

12 to the extent that the items of loss described in the 

13 preceding sentence exceed the items of income and 

14 gain described in the preceding sentence. 

15 ‘‘(12) ANNUAL STATEMENT.—For purposes of 

16 this subsection, the term ‘annual statement’ shall 

17 have the meaning set forth in section 846(f)(3). 

18 ‘‘(13) EXCLUSION OF PREMIUMS AND LOSSES

19 ON CERTAIN PUERTO RICAN RISKS.—Notwith20 standing any other provision of this subsection, pre21 miums and losses with respect to risks covered by a 

22 catastrophe reserve established under the laws or 

23 regulations of the Commonwealth of Puerto Rico 

24 shall not be taken into account under this subsection 


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1 in determining the amount of the fund cap or the 

2 amount of qualified losses. 

3 ‘‘(14) REGULATIONS.—The Secretary shall pre4 scribe such regulations as may be necessary or ap5 propriate to carry out the purposes of this sub6 section, including regulations— 

7 ‘‘(A) which govern the application of this 

8 subsection to a qualified insurance company 

9 having a taxable year other than the calendar 

10 year or a taxable year less than 12 months, 

11 ‘‘(B) which govern a fund maintained by a 

12 qualified insurance company that ceases to be 

13 subject to this part, and 

14 ‘‘(C) which govern the application of para15 graph (9)(D).’’. 

16 (d) EFFECTIVE DATE.—The amendments made by 

17 this section shall apply to taxable years beginning after 

18 December 31, 2013. 

19 TITLE II—CATASTROPHE 

20 SAVINGS ACCOUNTS 

21 SEC. 201. CATASTROPHE SAVINGS ACCOUNTS. 

22 (a) IN GENERAL.—Subchapter F of chapter 1 of the 

23 Internal Revenue Code of 1986 (relating to exempt organi24 zations) is amended by adding at the end the following 

25 new part: 


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1 ‘‘PART IX—CATASTROPHE SAVINGS ACCOUNTS 

2 ‘‘SEC. 530A. CATASTROPHE SAVINGS ACCOUNTS. 

3 ‘‘(a) GENERAL RULE.—A Catastrophe Savings Ac4 count shall be exempt from taxation under this subtitle. 

5 Notwithstanding the preceding sentence, such account 

6 shall be subject to the taxes imposed by section 511 (relat7 ing to imposition of tax on unrelated business income of 

8 charitable organizations). 

9 ‘‘(b) CATASTROPHE SAVINGS ACCOUNT.—For pur10 poses of this section, the term ‘Catastrophe Savings Ac11 count’ means a trust created or organized in the United 

12 States for the exclusive benefit of an individual or his 

13 beneficiaries and which is designated (in such manner as 

14 the Secretary shall prescribe) at the time of the establish15 ment of the trust as a Catastrophe Savings Account, but 

16 only if the written governing instrument creating the trust 

17 meets the following requirements: 

18 ‘‘(1) Except in the case of a qualified rollover 

19 contribution— 

20 ‘‘(A) no contribution will be accepted un21 less it is in cash, and 

22 ‘‘(B) contributions will not be accepted in 

23 excess of the account balance limit specified in 

24 subsection (c). 

25 ‘‘(2) The trustee is a bank (as defined in sec26 tion 408(n)) or another person who demonstrates to 


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1 the satisfaction of the Secretary that the manner in 

2 which that person will administer the trust will be 

3 consistent with the requirements of this section. 

4 ‘‘(3) The interest of an individual in the bal5 ance of his account is nonforfeitable. 

6 ‘‘(4) The assets of the trust shall not be com7 mingled with other property except in a common 

8 trust fund or common investment fund. 

9 ‘‘(c) ACCOUNT BALANCE LIMIT.—The aggregate ac10 count balance for all Catastrophe Savings Accounts main11 tained for the benefit of an individual (including qualified 

12 rollover contributions) shall not exceed— 

13 ‘‘(1) in the case of an individual whose qualified 

14 deductible is not more than $1,000, $2,000, and 

15 ‘‘(2) in the case of an individual whose qualified 

16 deductible is more than $1,000, the amount equal to 

17 the lesser of— 

18 ‘‘(A) $15,000, or 

19 ‘‘(B) twice the amount of the individual’s 

20 qualified deductible. 

21 ‘‘(d) DEFINITIONS.—For purposes of this section— 

22 ‘‘(1) QUALIFIED CATASTROPHE EXPENSES.— 

23 The term ‘qualified catastrophe expenses’ means ex24 penses paid or incurred by reason of a major dis25 aster that has been declared by the President under 


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1 section 401 of the Robert T. Stafford Disaster Relief 

2 and Emergency Assistance Act. 

3 ‘‘(2) QUALIFIED DEDUCTIBLE.—With respect 

4 to an individual, the term ‘qualified deductible’ 

5 means the annual deductible for the individual’s 

6 homeowners’ insurance policy. 

7 ‘‘(3) QUALIFIED ROLLOVER CONTRIBUTION.— 

8 The term ‘qualified rollover contribution’ means a 

9 contribution to a Catastrophe Savings Account— 

10 ‘‘(A) from another such account of the 

11 same beneficiary, but only if such amount is 

12 contributed not later than the 60th day after 

13 the distribution from such other account, and 

14 ‘‘(B) from a Catastrophe Savings Account 

15 of a spouse of the beneficiary of the account to 

16 which the contribution is made, but only if such 

17 amount is contributed not later than the 60th 

18 day after the distribution from such other ac19 count. 

20 ‘‘(e) TAX TREATMENT OF DISTRIBUTIONS.— 

21 ‘‘(1) IN GENERAL.—Any distribution from a 

22 Catastrophe Savings Account shall be includible in 

23 the gross income of the distributee in the manner as 

24 provided in section 72. 


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1 ‘‘(2) DISTRIBUTIONS FOR QUALIFIED CATAS2 TROPHE EXPENSES.— 

3 ‘‘(A) IN GENERAL.—No amount shall be 

4 includible in gross income under paragraph (1) 

5 if the qualified catastrophe expenses of the dis6 tributee during the taxable year are not less 

7 than the aggregate distributions during the tax8 able year. 

9 ‘‘(B) DISTRIBUTIONS IN EXCESS OF EX10 PENSES.—If such aggregate distributions ex11 ceed such expenses during the taxable year, the 

12 amount otherwise includible in gross income 

13 under paragraph (1) shall be reduced by the 

14 amount which bears the same ratio to the 

15 amount which would be includible in gross in16 come under paragraph (1) (without regard to 

17 this subparagraph) as the qualified catastrophe 

18 expenses bear to such aggregate distributions. 

19 ‘‘(3) ADDITIONAL TAX FOR DISTRIBUTIONS NOT

20 USED FOR QUALIFIED CATASTROPHE EXPENSES.— 

21 The tax imposed by this chapter for any taxable 

22 year on any taxpayer who receives a payment or dis23 tribution from a Catastrophe Savings Account which 

24 is includible in gross income shall be increased by 10 

25 percent of the amount which is so includible. 


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1 ‘‘(4) RETIREMENT DISTRIBUTIONS.—No 

2 amount shall be includible in gross income under 

3 paragraph (1) (or subject to an additional tax under 

4 paragraph (3)) if the payment or distribution is 

5 made on or after the date on which the distributee 

6 attains age 62. 

7 ‘‘(f) TAX TREATMENT OF ACCOUNTS.—Rules similar 

8 to the rules of paragraphs (2) and (4) of section 408(e) 

9 shall apply to any Catastrophe Savings Account.’’. 

10 (b) TAX ON EXCESS CONTRIBUTIONS.— 

11 (1) IN GENERAL.—Subsection (a) of section 

12 4973 of the Internal Revenue Code of 1986 (relating 

13 to tax on excess contributions to certain tax-favored 

14 accounts and annuities) is amended by striking ‘‘or’’ 

15 at the end of paragraph (4), by inserting ‘‘or’’ at the 

16 end of paragraph (5), and by inserting after para17 graph (5) the following new paragraph: 

18 ‘‘(6) a Catastrophe Savings Account (as defined 

19 in section 530A),’’. 

20 (2) EXCESS CONTRIBUTION.—Section 4973 of 

21 such Code is amended by adding at the end the fol22 lowing new subsection: 

23 ‘‘(h) EXCESS CONTRIBUTIONS TO CATASTROPHE

24 SAVINGS ACCOUNTS.—For purposes of this section, in the 

25 case of Catastrophe Savings Accounts (within the meaning 


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1 of section 530A), the term ‘excess contributions’ means 

2 the amount by which the aggregate account balance for 

3 all Catastrophe Savings Accounts maintained for the ben4 efit of an individual exceeds the account balance limit de5 fined in section 530A(c)(1).’’. 

6 (c) CONFORMING AMENDMENT.—The table of parts 

7 for subchapter F of chapter 1 of the Internal Revenue 

8 Code of 1986 is amended by adding at the end the fol9 lowing new item: 

‘‘PART IX. CATASTROPHE SAVINGS ACCOUNTS’’. 

10 (d) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to taxable years beginning after 

12 December 31, 2013. 

13 TITLE III—TAX CREDIT FOR NAT14 URAL DISASTER MITIGATION 

15 PROPERTY 

16 SEC. 301. NONREFUNDABLE PERSONAL CREDIT FOR NAT17 URAL DISASTER MITIGATION PROPERTY. 

18 (a) IN GENERAL.—Subpart A of part IV of sub19 chapter A of chapter 1 of the Internal Revenue Code of 

20 1986 is amended by inserting after section 25D the fol21 lowing new section: 

22 ‘‘SEC. 25E. NATURAL DISASTER MITIGATION PROPERTY. 

23 ‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in24 dividual, there shall be allowed as a credit against the tax 

25 imposed by this chapter for the taxable year an amount 


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1 equal to 25 percent of the qualified natural disaster miti2 gation property expenditures made by the taxpayer during 

3 such taxable year in connection with a qualified principal 

4 residence of the taxpayer. 

5 ‘‘(b) MAXIMUM CREDIT.—The credit allowed under 

6 subsection (a) with respect to any principal residence of 

7 the taxpayer for any taxable year shall not exceed the ex8 cess of— 

9 ‘‘(1) $5,000 (half such amount in the case of a 

10 married individual filing a separate return), over 

11 ‘‘(2) the aggregate amounts allowed as a credit 

12 under this section to the taxpayer (or the taxpayer’s 

13 spouse) with respect to such residence for all prior 

14 taxable years. 

15 ‘‘(c) LIMITATION BASED ON AMOUNT OF TAX.—In 

16 the case of a taxable year to which section 26(a)(2) does 

17 not apply, the credit allowed under subsection (a) for any 

18 taxable year shall not exceed the excess of— 

19 ‘‘(1) the sum of the regular tax liability (as de20 fined in section 26(b)) plus the tax imposed by sec21 tion 55, over 

22 ‘‘(2) the sum of the credits allowable under this 

23 subpart (other than this section and sections 23, 24, 

24 and 25B) and section 27 for the taxable year. 


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1 ‘‘(d) QUALIFIED NATURAL DISASTER MITIGATION

2 PROPERTY EXPENDITURE.—For purposes of this section, 

3 the term ‘qualified natural disaster mitigation property ex4 penditure’ means an expenditure for— 

5 ‘‘(1) property to improve the strength of a roof 

6 deck attachment, 

7 ‘‘(2) property to create a secondary water bar8 rier to prevent water intrusion, 

9 ‘‘(3) property to improve the durability of a 

10 roof covering, 

11 ‘‘(4) property to brace gable-end walls, 

12 ‘‘(5) property to reinforce the connection be13 tween a roof and supporting wall, 

14 ‘‘(6) property to protect openings from penetra15 tion by windborne debris, 

16 ‘‘(7) property to protect exterior doors and ga17 rages, 

18 ‘‘(8) property to improve the natural resiliency 

19 of the property, including the restoration, establish20 ment, or enhancement of aquatic resources (having 

21 the meanings given such terms by part 332 of title 

22 33 of the Code of Federal Regulations), as pre23 scribed by the Secretary after consultation with the 

24 Administrator of the Environmental Protection 


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1 Agency and the Assistant Secretary of the Army for 

2 Civil Works, 

3 ‘‘(9) seismic retrofitting, including property to 

4 increase resistance to seismic activity, ground mo5 tion, or soil failure due to earthquakes, or 

6 ‘‘(10) such other measures to mitigate natural 

7 disaster damage to homes, as prescribed by the Sec8 retary after consultation with the Administrator of 

9 the Federal Emergency Management Agency and, to 

10 the extent applicable, in accordance with section 

11 12(d) of the National Technology Transfer and Ad12 vancement Act of 1995 (15 U.S.C. 272 note; Public 

13 Law 104–113). 

14 ‘‘(e) QUALIFIED PRINCIPAL RESIDENCE.—For pur15 poses of this section, the term ‘qualified principal resi16 dence’ means the principal residence of the taxpayer (with17 in the meaning of section 121) if such residence— 

18 ‘‘(1) is assessed by the locality in which it is lo19 cated at a value which does not exceed 300 percent 

20 of the national median home price (determined as of 

21 the close of the taxable year for which the credit de22 termined under this section is allowed), and 

23 ‘‘(2) is not severe repetitive loss property (as 

24 defined in section 1361A of the National Flood In25 surance Act (42 U.S.C. 4102a(b))). 


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1 ‘‘(f) RULES RELATED TO INSPECTIONS AND LABOR

2 COSTS.—For purposes of this section— 

3 ‘‘(1) INSPECTION REQUIREMENT.—An expendi4 ture shall be taken into account in determining the 

5 qualified natural disaster mitigation property ex6 penditures made by the taxpayer during the taxable 

7 year only if the installation of the property with re8 spect to which such expenditure is made has been 

9 completed in a manner that is deemed to be ade10 quate by an inspector that is licensed or certified by 

11 the State or other governmental authority, or its 

12 designee, having jurisdiction over inspectors in the 

13 area where the installed property is located. 

14 ‘‘(2) LABOR AND INSPECTION COSTS.—For pur15 poses of this section, expenditures for labor costs 

16 properly allocable to the onsite preparation, assem17 bly, or original installation of the property described 

18 in subsection (d) (including the cost of inspections 

19 referred to in paragraph (1)) shall be taken into ac20 count in determining the qualified natural disaster 

21 mitigation property expenditures made by the tax22 payer during the taxable year. 

23 ‘‘(g) BASIS ADJUSTMENT.—For purposes of this sec24 tion, if a credit is allowed under this section for any ex25 penditure with respect to any property, the increase in the 


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1 basis of such property which would (but for this sub2 section) result from such expenditure shall be reduced by 

3 the amount of the credit so allowed.’’. 

4 (b) CONFORMING AMENDMENT.—The table of sec5 tions for subpart A of part IV of subchapter A of chapter 

6 1 of such Code is amended by inserting after the item 

7 relating to section 25D the following new item: 

‘‘Sec. 25E. Natural disaster mitigation property.’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 December 31, 2013. 

Æ 


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