To amend the Internal Revenue Code of 1986 to provide incentives for Americans to open their homes to fellow Americans from the Gulf Coast who were devastated by Hurricane Katrina, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Katrina Aftermath Relief Effort Tax 
Credit Act''.

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--The Congress finds the following:
            (1) Hurricane Katrina devastated the Gulf Coast States of 
        Louisiana, Mississippi, and Alabama on August 29, 2005.
            (2) An estimated 1,000,000 Americans from the Gulf Coast 
        were forced to flee their homes as a result of Hurricane 
        Katrina.
            (3) Many of the displaced victims of Hurricane Katrina are 
        currently residing in shelters across the country, including in 
        Texas, Louisiana, Mississippi, Alabama, Wisconsin, Arkansas, 
        Florida, Tennessee, Georgia, and other States.
            (4) Many of these shelters, including Kelly USA in San 
        Antonio and the Astrodome in Houston, are only intended to 
        serve as temporary homes for the victims of Hurricane Katrina.
            (5) In addition to the temporary shelters, Americans have 
        opened their homes to welcome the victims of Hurricane Katrina. 
        Many Americans who have opened their homes also pay expenses 
        such as food, clothing, school supplies, transportation, or 
        personal items for the benefit of those victims of Hurricane 
        Katrina residing with them.
            (6) Due to the devastation of Hurricane Katrina, many 
        Americans from the Gulf Coast cannot return to their homes for 
        many months. As a result, it is necessary to find intermediate-
        term and long-term housing for the victims of Hurricane 
        Katrina.
            (7) Long-term housing can be difficult to locate in certain 
        areas. In addition, locating long-term housing can be a lengthy 
        process.
            (8) Intermediate-term housing is appropriate for the 
        victims of Hurricane Katrina until long-term housing can be 
        located.
            (9) Opening private homes to victims of Hurricane Katrina 
        is vital to the overall effort to find intermediate-term 
        housing for the victims of Hurricane Katrina.
    (b) Purposes.--The purposes of this Act are as follows:
            (1) To provide incentives for Americans to open their homes 
        to fellow Americans from the Gulf Coast who were devastated by 
        Hurricane Katrina.
            (2) To partially offset expenses paid by Americans who open 
        their homes to victims of Hurricane Katrina.
            (3) To amend the Internal Revenue Code of 1986 to provide a 
        tax credit to partially offset the costs of food, clothing, 
        school supplies, transportation, or personal items paid by 
        Americans who house victims of Hurricane Katrina for the 
        benefit of such victims of Hurricane Katrina.

SEC. 3. KATRINA AFTERMATH RELIEF EFFORT CREDIT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by redesignating section 36 as section 37 and by inserting 
after section 35 the following new section:

``SEC. 36. KATRINA AFTERMATH RELIEF EFFORT CREDIT.

    ``(a) Allowance of Credit.--In the case of an individual, there 
shall be allowed as a credit against the tax imposed by this chapter 
for the taxable year an amount equal to the qualified housing support 
expenses paid or incurred by the taxpayer during the taxable year for 
the benefit of a qualified individual who resides in housing provided 
by the taxpayer.
    ``(b) Limitation.--The credit allowable under subsection (a) for 
any taxable year shall not exceed $1,000.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified individual.--The term `qualified 
        individual' means any individual who is displaced by reason of 
        Hurricane Katrina.
            ``(2) Qualified housing support expenses.--The term 
        `qualified housing support expenses' means any expenses paid or 
        incurred for food, clothing, school supplies, transportation, 
        or personal items of a qualified individual during the period 
        that such qualified individual resides in housing provided by 
        the taxpayer.
    ``(d) Substantiation Required.--No credit shall be allowed under 
this section unless the taxpayer substantiates by adequate records or 
by sufficient evidence corroborating the taxpayer's own statement--
            ``(1) the amount of the expense,
            ``(2) the time and place of the expense,
            ``(3) the purpose of the expense, and
            ``(4) the name of the qualified individual to which the 
        expense relates.
    ``(e) Application.--Subsection (a) shall apply only to amounts paid 
or incurred during the period beginning on August 29, 2005, and ending 
on December 31, 2006.''.
    (b) Conforming Amendments.--
            (1) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by redesignating the item relating to section 36 as 
        an item relating to section 37 and by inserting before such 
        item the following new item:

``Sec. 36. Katrina aftermath relief effort credit.''.
            (2) Section 1324(b)(2) of title 31, United States Code, is 
        amended by inserting ``or 36'' after ``section 35''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred on or after August 29, 2005.

Summary: Katrina Aftermath Relief Effort Tax Credit Act - Amends the Internal Revenue Code to allow individual taxpayers a refundable tax credit for certain housing support expenses (e.g., food, clothing, and school supplies) paid or incurred between August 29, 2005, and December 31, 2006, to help individuals displaced by Hurricane Katrina. Limits the amount of such credit to $1,000 for any taxable year.