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Sec. 201. Work opportunity tax credit for Hurricane Katrina employees. 
Sec. 202. Employee retention credit for employers affected by Hurricane 
Katrina. 
TITLE III—CHARITABLE GIVING INCENTIVES 
Sec. 301. Temporary suspension of limitations on charitable contributions. 
Sec. 302. Additional exemption for housing Hurricane Katrina displaced indi-
viduals. 
Sec. 303. Increase in standard mileage rate for charitable use of vehicles. 
Sec. 304. Mileage reimbursements to charitable volunteers excluded from gross 
income. 
Sec. 305. Charitable deduction for contributions of food inventory. 
Sec. 306. Charitable deduction for contributions of book inventories to public 
schools. 
TITLE IV—ADDITIONAL TAX RELIEF PROVISIONS 
Sec. 401. Exclusions of certain cancellations of indebtedness by reason of Hur-
ricane Katrina. 
Sec. 402. Suspension of certain limitations on personal casualty losses. 
Sec. 403. Required exercise of authority under section 7508A for tax relief re-
lating to Hurricane Katrina. 
Sec. 404. Special rules for mortgage revenue bonds. 
Sec. 405. Extension of replacement period for nonrecognition of gain for prop-
erty located in Hurricane Katrina disaster area. 
Sec. 406. Special rule for determining earned income. 
Sec. 407. Secretarial authority to make adjustments regarding taxpayer and de-
pendency status. 
TITLE V—EMERGENCY REQUIREMENT 
Sec. 501. Emergency requirement.
SEC. 2. HURRICANE KATRINA DISASTER AREA. 
For purposes of this Act—
(1) HURRICANE
KATRINA
DISASTER
AREA.—
The term ‘‘Hurricane Katrina disaster area’’ means 
an area with respect to which a major disaster has 
been declared by the President before September 14, 
2005, under section 401 of the Robert T. Stafford 
Disaster Relief and Emergency Assistance Act by 
reason of Hurricane Katrina. 
(2) CORE
DISASTER
AREA.—The term ‘‘core 
disaster area’’ means that portion of the Hurricane
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Katrina disaster area determined by the President to 
warrant individual or individual and public assist-
ance from the Federal Government under such Act. 
TITLE I—SPECIAL RULES FOR 
USE OF RETIREMENT FUNDS 
FOR RELIEF RELATING TO 
HURRICANE KATRINA 
SEC. 101. TAX-FAVORED WITHDRAWALS FROM RETIRE-
MENT PLANS FOR RELIEF RELATING TO HUR-
RICANE KATRINA. 
(a) IN GENERAL.—Section 72(t) of the Internal Rev-
enue Code of 1986 shall not apply to any qualified Hurri-
cane Katrina distribution. 
(b) AGGREGATE DOLLAR LIMITATION.—
(1) IN GENERAL.—For purposes of this section, 
the aggregate amount of distributions received by an 
individual which may be treated as qualified Hurri-
cane Katrina distributions for any taxable year shall 
not exceed the excess (if any) of—
(A) $100,000, over 
(B) the aggregate amounts treated as 
qualified Hurricane Katrina distributions re-
ceived by such individual for all prior taxable 
years.
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(2) TREATMENT OF PLAN DISTRIBUTIONS.—If 
a distribution to an individual would (without regard 
to paragraph (1)) be a qualified Hurricane Katrina 
distribution, a plan shall not be treated as violating 
any requirement of the Internal Revenue Code of 
1986 merely because the plan treats such distribu-
tion as a qualified Hurricane Katrina distribution, 
unless the aggregate amount of such distributions 
from all plans maintained by the employer (and any 
member of any controlled group which includes the 
employer) to such individual exceeds $100,000. 
(3) CONTROLLED
GROUP.—For purposes of 
paragraph (2), the term ‘‘controlled group’’ means 
any group treated as a single employer under sub-
section (b), (c), (m), or (o) of section 414 of such 
Code. 
(c) AMOUNT DISTRIBUTED MAY BE REPAID.—
(1) IN GENERAL.—Any individual who receives 
a qualified Hurricane Katrina distribution may, at 
any time during the 3-year period beginning on the 
day after the date on which such distribution was re-
ceived, make one or more contributions in an aggre-
gate amount not to exceed the amount of such dis-
tribution to an eligible retirement plan of which such 
individual is a beneficiary and to which a rollover
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contribution of such distribution could be made 
under 
section 
402(c), 
403(a)(4), 
403(b)(8), 
408(d)(3), or 457(e)(16) of such Code, as the case 
may be. 
(2) TREATMENT OF REPAYMENTS OF DISTRIBU-
TIONS FROM ELIGIBLE RETIREMENT PLANS OTHER 
THAN IRAS.—For purposes of such Code, if a con-
tribution is made pursuant to paragraph (1) with re-
spect to a qualified Hurricane Katrina distribution 
from an eligible retirement plan other than an indi-
vidual retirement plan, then the taxpayer shall, to 
the extent of the amount of the contribution, be 
treated as having received the qualified Hurricane 
Katrina distribution in an eligible rollover distribu-
tion (as defined in section 402(c)(4) of such Code) 
and as having transferred the amount to the eligible 
retirement plan in a direct trustee to trustee trans-
fer within 60 days of the distribution. 
(3) TREATMENT
OF
REPAYMENTS
FOR
DIS-
TRIBUTIONS
FROM
IRAS.—For purposes of such 
Code, if a contribution is made pursuant to para-
graph (1) with respect to a qualified Hurricane 
Katrina distribution from an individual retirement 
plan (as defined by section 7701(a)(37) of such 
Code), then, to the extent of the amount of the con-
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tribution, the qualified Hurricane Katrina distribu-
tion shall be treated as a distribution described in 
section 408(d)(3) of such Code and as having been 
transferred to the eligible retirement plan in a direct 
trustee to trustee transfer within 60 days of the dis-
tribution. 
(d) DEFINITIONS.—For purposes of this section—
(1) QUALIFIED HURRICANE KATRINA DISTRIBU-
TION.—Except as provided in subsection (b), the 
term ‘‘qualified Hurricane Katrina distribution’’ 
means any distribution from an eligible retirement 
plan made on or after August 25, 2005, and before 
January 1, 2007, to an individual whose principal 
place of abode on August 28, 2005, is located in the 
Hurricane Katrina disaster area and who has sus-
tained an economic loss by reason of Hurricane 
Katrina. 
(2) ELIGIBLE RETIREMENT PLAN.—The term 
‘‘eligible retirement plan’’ shall have the meaning 
given such term by section 402(c)(8)(B) of such 
Code. 
(e) INCOME INCLUSION SPREAD OVER 3 YEAR PE-
RIOD FOR QUALIFIED HURRICANE KATRINA DISTRIBU-
TIONS.—
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(1) IN GENERAL.—In the case of any qualified 
Hurricane Katrina distribution, unless the taxpayer 
elects not to have this subsection apply for any tax-
able year, any amount required to be included in 
gross income for such taxable year shall be so in-
cluded ratably over the 3-taxable year period begin-
ning with such taxable year. 
(2) SPECIAL
RULE.—For purposes of para-
graph (1), rules similar to the rules of subparagraph 
(E) of section 408A(d)(3) of such Code shall apply. 
(f) SPECIAL RULES.—
(1) EXEMPTION
OF
DISTRIBUTIONS
FROM 
TRUSTEE
TO
TRUSTEE
TRANSFER
AND
WITH-
HOLDING
RULES.—For 
purposes 
of 
sections 
401(a)(31), 402(f), and 3405 of such Code, qualified 
Hurricane Katrina distributions shall not be treated 
as eligible rollover distributions. 
(2) QUALIFIED HURRICANE KATRINA DISTRIBU-
TIONS TREATED AS MEETING PLAN DISTRIBUTION 
REQUIREMENTS.—For purposes of such Code, a 
qualified Hurricane Katrina distribution shall be 
treated as meeting the requirements of sections 
401(k)(2)(B)(i), 403(b)(7)(A)(ii), 403(b)(11), and 
457(d)(1)(A) of such Code.
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SEC. 102. RECONTRIBUTIONS OF WITHDRAWALS FOR HOME 
PURCHASES CANCELLED DUE TO HURRI-
CANE KATRINA. 
(a) RECONTRIBUTIONS.—
(1) IN GENERAL.—Any individual who received 
a qualified distribution may, during the period be-
ginning on August 25, 2005, and ending on Feb-
ruary 28, 2006, make one or more contributions in 
an aggregate amount not to exceed the amount of 
such qualified distribution to an eligible retirement 
plan (as defined in section 402(c)(8)(B) of the Inter-
nal Revenue Code of 1986) of which such individual 
is a beneficiary and to which a rollover contribution 
of such distribution could be made under section 
402(c), 403(a)(4), 403(b)(8), or 408(d)(3) of such 
Code, as the case may be. 
(2) TREATMENT OF REPAYMENTS.—Rules simi-
lar to the rules of paragraphs (2) and (3) of section 
101(c) of this Act shall apply for purposes of this 
section. 
(b) QUALIFIED DISTRIBUTION DEFINED.—For pur-
poses of this section, the term ‘‘qualified distribution’’ 
means any distribution—
(1) described in section 401(k)(2)(B)(i)(IV), 
403(b)(7)(A)(ii) (but only to the extent such dis-
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tribution 
relates 
to 
financial 
hardship), 
403(b)(11)(B), or 72(t)(2)(F) of such Code, 
(2) received after February 28, 2005, and be-
fore August 29, 2005, and 
(3) which was to be used to purchase or con-
struct a principal residence in the Hurricane 
Katrina disaster area, but which was not so pur-
chased or constructed on account of Hurricane 
Katrina. 
SEC. 103. LOANS FROM QUALIFIED PLANS FOR RELIEF RE-
LATING TO HURRICANE KATRINA. 
(a) INCREASE IN LIMIT ON LOANS NOT TREATED AS 
DISTRIBUTIONS.—In the case of any loan from a qualified 
employer plan (as defined under section 72(p)(4) of the 
Internal Revenue Code of 1986) to a qualified individual 
made after the date of enactment of this Act and before 
January 1, 2007—
(1) clause (i) of section 72(p)(2)(A) of such 
Code shall be applied by substituting ‘‘$100,000’’ 
for ‘‘$50,000’’, and 
(2) clause (ii) of such section shall be applied 
by substituting ‘‘the present value of the nonforfeit-
able accrued benefit of the employee under the plan’’ 
for ‘‘one-half of the present value of the nonforfeit-
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able accrued benefit of the employee under the 
plan’’. 
(b) DELAY OF REPAYMENT.—In the case of a quali-
fied individual with an outstanding loan on or after Au-
gust 25, 2005, from a qualified employer plan (as defined 
in section 72(p)(4) of such Code)—
(1) if the due date pursuant to subparagraph 
(B) or (C) of section 72(p)(2) of such Code for any 
repayment with respect to such loan occurs during 
the period beginning on August 25, 2005, and end-
ing on December 31, 2006, such due date shall be 
delayed for 1 year, 
(2) any subsequent repayments with respect to 
any such loan shall be appropriately adjusted to re-
flect the delay in the due date under paragraph (1) 
and any interest accruing during such delay, and 
(3) in determining the 5-year period and the 
term of a loan under subparagraph (B) or (C) of 
section 72(p)(2) of such Code, the period described 
in paragraph (1) shall be disregarded. 
(c) QUALIFIED INDIVIDUAL.—For purposes of this 
section, the term ‘‘qualified individual’’ means an indi-
vidual whose principal place of abode on August 28, 2005, 
is located in the Hurricane Katrina disaster area and who
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has sustained an economic loss by reason of Hurricane 
Katrina. 
SEC. 104. PROVISIONS RELATING TO PLAN AMENDMENTS. 
(a) IN GENERAL.—If this section applies to any 
amendment to any plan or annuity contract, such plan or 
contract shall be treated as being operated in accordance 
with the terms of the plan during the period described in 
subsection (b)(2)(A). 
(b) AMENDMENTS TO WHICH SECTION APPLIES.—
(1) IN GENERAL.—This section shall apply to 
any amendment to any plan or annuity contract 
which is made—
(A) pursuant to any amendment made by 
this title, or pursuant to any regulation issued 
by the Secretary of the Treasury or the Sec-
retary of Labor under this title, and 
(B) on or before the last day of the first 
plan year beginning on or after January 1, 
2007, or such later date as the Secretary of the 
Treasury may prescribe. 
In the case of a governmental plan (as defined in 
section 414(d) of the Internal Revenue Code of 
1986), subparagraph (B) shall be applied by sub-
stituting the date which is 2 years after the date 
otherwise applied under subparagraph (B).
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(2) CONDITIONS.—This section shall not apply 
to any amendment unless—
(A) during the period—
(i) beginning on the date the legisla-
tive or regulatory amendment described in 
paragraph (1)(A) takes effect (or in the 
case of a plan or contract amendment not 
required by such legislative or regulatory 
amendment, the effective date specified by 
the plan), and 
(ii) ending on the date described in 
paragraph (1)(B) (or, if earlier, the date 
the plan or contract amendment is adopt-
ed), 
the plan or contract is operated as if such plan 
or contract amendment were in effect; and 
(B) such plan or contract amendment ap-
plies retroactively for such period. 
TITLE II—EMPLOYMENT RELIEF 
SEC. 201. WORK OPPORTUNITY TAX CREDIT FOR HURRI-
CANE KATRINA EMPLOYEES. 
(a) IN GENERAL.—For purposes of section 51 of the 
Internal Revenue Code of 1986, a Hurricane Katrina em-
ployee shall be treated as a member of a targeted group.
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(b) HURRICANE KATRINA EMPLOYEE.—For pur-
poses of this section, the term ‘‘Hurricane Katrina em-
ployee’’ means—
(1) any individual who on August 28, 2005, 
had a principal place of abode in the core disaster 
area and who is hired during the 2-year period be-
ginning on such date for a position the principal 
place of employment of which is located in the core 
disaster area, and 
(2) any individual who on such date had a prin-
cipal place of abode in the core disaster area, who 
is displaced from such abode by reason of Hurricane 
Katrina, and who is hired during the period begin-
ning on such date and ending on December 31, 
2005. 
(c) REASONABLE IDENTIFICATION ACCEPTABLE.—In 
lieu of the certification requirement under subparagraph 
(A) of section 51(d)(12) of such Code, an individual may 
provide to the employer reasonable evidence that the indi-
vidual is a Hurricane Katrina employee, and subpara-
graph (B) of such section shall be applied as if such evi-
dence were a certification described in such subparagraph. 
(d) SPECIAL RULES FOR DETERMINING CREDIT.—
For purposes of applying subpart F of part IV of sub-
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chapter A of chapter 1 of such Code to wages paid or in-
curred to any Hurricane Katrina employee—
(1) section 51(c)(4) of such Code shall not 
apply, and 
(2) section 51(i)(2) of such Code shall not 
apply with respect to the first hire of such employee 
as a Hurricane Katrina employee, unless such em-
ployee was an employee of the employer on August 
28, 2005. 
SEC. 202. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS 
AFFECTED BY HURRICANE KATRINA. 
(a) IN GENERAL.—In the case of an eligible em-
ployer, there shall be allowed as a credit against the tax 
imposed by chapter 1 of the Internal Revenue Code of 
1986 for the taxable year an amount equal to 40 percent 
of the qualified wages with respect to each eligible em-
ployee of such employer for such taxable year. For pur-
poses of the preceding sentence, the amount of qualified 
wages which may be taken into account with respect to 
any individual shall not exceed $6,000. 
(b) DEFINITIONS.—For purposes of this section—
(1) ELIGIBLE EMPLOYER.—The term ‘‘eligible 
employer’’ means any employer—
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(A) which conducted an active trade or 
business on August 28, 2005, in a core disaster 
area, and 
(B) with respect to whom the trade or 
business described in subparagraph (A) is inop-
erable on any day after August 28, 2005, and 
before January 1, 2006, as a result of damage 
sustained by reason of Hurricane Katrina. 
(2) ELIGIBLE EMPLOYEE.—The term ‘‘eligible 
employee’’ means with respect to an eligible em-
ployer an employee whose principal place of employ-
ment on August 28, 2005, with such eligible em-
ployer was in a core disaster area. 
(3) QUALIFIED WAGES.—The term ‘‘qualified 
wages’’ means wages (as defined in section 51(c)(1) 
of such Code, but without regard to section 
3306(b)(2)(B) of such Code) paid or incurred by an 
eligible employer with respect to an eligible employee 
on any day after August 28, 2005, and before Janu-
ary 1, 2006, which occurs during the period—
(A) beginning on the date on which the 
trade or business described in paragraph (1) 
first became inoperable at the principal place of 
employment of the employee immediately before 
Hurricane Katrina, and
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(B) ending on the date on which such 
trade or business has resumed significant oper-
ations at such principal place of employment. 
Such term shall include wages paid without regard 
to whether the employee performs no services, per-
forms services at a different place of employment 
than such principal place of employment, or per-
forms services at such principal place of employment 
before significant operations have resumed. 
(c) CREDIT
NOT
ALLOWED
FOR
LARGE
BUSI-
NESSES.—The term ‘‘eligible employer’’ shall not include 
any trade or business for any taxable year if such trade 
or business employed an average of more than 200 em-
ployees on business days during the taxable year. 
(d) CERTAIN RULES TO APPLY.—For purposes of 
this section, rules similar to the rules of sections 51(i)(1), 
52, and 280C(a) of such Code shall apply. 
(e) EMPLOYEE NOT TAKEN INTO ACCOUNT MORE 
THAN ONCE.—An employee shall not be treated as an eli-
gible employee for purposes of this section for any period 
with respect to any employer if such employer is allowed 
a credit under section 51 of such Code with respect to 
such employee for such period. 
(f) CREDIT TO BE PART OF GENERAL BUSINESS 
CREDIT.—The credit allowed under this section shall be
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added to the current year business credit under section 
38(b) of such Code and shall be treated as a credit allowed 
under subpart D of part IV of subchapter A of chapter 
1 of such Code. 
TITLE III—CHARITABLE GIVING 
INCENTIVES 
SEC. 301. TEMPORARY SUSPENSION OF LIMITATIONS ON 
CHARITABLE CONTRIBUTIONS. 
(a) IN GENERAL.—Except as otherwise provided in 
subsection (b), section 170(b) of the Internal Revenue 
Code of 1986 shall not apply to qualified contributions and 
such contributions shall not be taken into account for pur-
poses of applying subsections (b) and (d) of section 170 
of such Code to other contributions. 
(b) TREATMENT OF EXCESS CONTRIBUTIONS.—For 
purposes of section 170 of such Code—
(1) INDIVIDUALS.—In the case of an indi-
vidual—
(A) LIMITATION.—Any qualified contribu-
tion shall be allowed only to the extent that the 
aggregate of such contributions does not exceed 
the excess of the taxpayer’s contribution base 
(as defined in subparagraph (F) of section 
170(b)(1) of such Code) over the amount of all
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other charitable contributions allowed under 
such section 170(b)(1). 
(B) 
CARRYOVER.—If 
the 
aggregate 
amount of qualified contributions made in the 
contribution year (within the meaning of section 
170(d)(1) of such Code) exceeds the limitation 
of subparagraph (A), such excess shall be added 
to the excess described in the portion of sub-
paragraph (A) of such section which precedes 
clause (i) thereof for purposes of applying such 
section. 
(2) CORPORATIONS.—In the case of a corpora-
tion—
(A) LIMITATION.—Any qualified contribu-
tion shall be allowed only to the extent that the 
aggregate of such contributions does not exceed 
the excess of the taxpayer’s taxable income (as 
determined under paragraph (2) of section 
170(b) of such Code) over the amount of all 
other charitable contributions allowed under 
such paragraph. 
(B) CARRYOVER.—Rules similar to the 
rules of paragraph (1)(B) shall apply for pur-
poses of this paragraph.
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(c) EXCEPTION
TO
OVERALL
LIMITATION
ON 
ITEMIZED DEDUCTIONS.—So much of any deduction al-
lowed under section 170 of such Code as does not exceed 
the qualified contributions paid during the taxable year 
shall not be treated as an itemized deduction for purposes 
of section 68 of such Code. 
(d) QUALIFIED CONTRIBUTIONS.—
(1) IN GENERAL.—For purposes of this section, 
the term ‘‘qualified contribution’’ means any chari-
table contribution (as defined in section 170(c) of 
such Code)—
(A) paid during the period beginning on 
August 28, 2005, and ending on December 31, 
2005, in cash to an organization described in 
section 170(b)(1)(A) of such Code (other than 
an organization described in section 509(a)(3) 
of such Code), 
(B) in the case of a contribution paid by 
a corporation, such contribution is for relief ef-
forts related to Hurricane Katrina, and 
(C) with respect to which the taxpayer has 
elected the application of this section. 
(2) EXCEPTION.—Such term shall not include a 
contribution if the contribution is for establishment 
of a new, or maintenance in an existing, segregated
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fund or account with respect to which the donor (or 
any person appointed or designated by such donor) 
has, or reasonably expects to have, advisory privi-
leges with respect to distributions or investments by 
reason of the donor’s status as a donor. 
(3) APPLICATION OF ELECTION TO PARTNER-
SHIPS AND S CORPORATIONS.—In the case of a part-
nership or S corporation, the election under para-
graph (1)(C) shall be made separately by each part-
ner or shareholder. 
SEC. 302. ADDITIONAL EXEMPTION FOR HOUSING HURRI-
CANE KATRINA DISPLACED INDIVIDUALS. 
(a) IN GENERAL.—In the case of taxable years of a 
natural person beginning in 2005 or 2006, for purposes 
of the Internal Revenue Code of 1986, taxable income 
shall be reduced by $500 for each Hurricane Katrina dis-
placed individual of the taxpayer for the taxable year. 
(b) LIMITATIONS.—
(1) DOLLAR LIMITATION.—The reduction under 
subsection (a) shall not exceed $2,000, reduced by 
the amount of the reduction under this section for 
all prior taxable years. 
(2) INDIVIDUALS TAKEN INTO ACCOUNT ONLY 
ONCE.—An individual shall not be taken into ac-
count under subsection (a) if such individual was