Title: California Wildfire Disaster Tax Relief Act of 2017
Policy area: Taxation

Summary:
California Wildfire Disaster Tax Relief Act of 2017
This bill amends the Internal Revenue Code to allow various tax credits, deductions, and modifications to existing rules for individuals and businesses affected by wildfires in California.
With respect to individuals and businesses in the affected areas, the bill:
The bill is designated as an emergency requirement, which exempts the budgetary effects of the bill from certain budget enforcement rules, such as Pay-As-You-Go (PAYGO) rules.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4397 Introduced in House (IH)]

<DOC>






115th CONGRESS
  1st Session
                                H. R. 4397

      To provide tax relief with respect to California wildfires.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                           November 15, 2017

     Mrs. Mimi Walters of California (for herself, Mr. Thompson of 
  California, Mr. McCarthy, Mr. LaMalfa, Mr. Royce of California, Mr. 
Denham, Mr. Calvert, Ms. Brownley of California, Mr. Bera, Ms. Lofgren, 
Mr. Huffman, Mr. Costa, Ms. Matsui, Mr. Garamendi, Ms. Speier, Ms. Lee, 
  Mr. DeSaulnier, Ms. Eshoo, and Mr. Gomez) introduced the following 
  bill; which was referred to the Committee on Ways and Means, and in 
      addition to the Committee on the Budget, 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 tax relief with respect to California wildfires.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``California Wildfire Disaster Tax 
Relief Act of 2017''.

SEC. 2. DEFINITIONS.

    For purposes of this Act--
            (1) California wildfire disaster zone.--The term 
        ``California wildfire disaster zone'' means that portion of the 
        California wildfire disaster area determined by the President 
        to warrant individual or individual and public assistance from 
        the Federal Government under the Robert T. Stafford Disaster 
        Relief and Emergency Assistance Act by reason of wildfires in 
        California.
            (2) California wildfire disaster area.--The term 
        ``California wildfire disaster area'' means an area with 
        respect to which a major disaster has been declared by the 
        President before November 15, 2017, under section 401 of such 
        Act by reason of wildfires in California.

SEC. 3. SPECIAL DISASTER-RELATED RULES FOR USE OF RETIREMENT FUNDS.

    (a) Tax-Favored Withdrawals From Retirement Plans.--
            (1) In general.--Section 72(t) of the Internal Revenue Code 
        of 1986 shall not apply to any qualified wildfire distribution.
            (2) Aggregate dollar limitation.--
                    (A) In general.--For purposes of this subsection, 
                the aggregate amount of distributions received by an 
                individual which may be treated as qualified wildfire 
                distributions for any taxable year shall not exceed the 
                excess (if any) of--
                            (i) $100,000, over
                            (ii) the aggregate amounts treated as 
                        qualified wildfire distributions received by 
                        such individual for all prior taxable years.
                    (B) Treatment of plan distributions.--If a 
                distribution to an individual would (without regard to 
                subparagraph (A)) be a qualified wildfire distribution, 
                a plan shall not be treated as violating any 
                requirement of the Internal Revenue Code of 1986 merely 
                because the plan treats such distribution as a 
                qualified wildfire 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.
                    (C) Controlled group.--For purposes of subparagraph 
                (B), the term ``controlled group'' means any group 
                treated as a single employer under subsection (b), (c), 
                (m), or (o) of section 414 of the Internal Revenue Code 
                of 1986.
            (3) Amount distributed may be repaid.--
                    (A) In general.--Any individual who receives a 
                qualified wildfire distribution may, at any time during 
                the 3-year period beginning on the day after the date 
                on which such distribution was received, make one or 
                more contributions in an aggregate amount not to exceed 
                the amount of such distribution to an eligible 
                retirement plan 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), 408(d)(3), or 457(e)(16), of the 
                Internal Revenue Code of 1986, as the case may be.
                    (B) Treatment of repayments of distributions from 
                eligible retirement plans other than iras.--For 
                purposes of the Internal Revenue Code of 1986, if a 
                contribution is made pursuant to subparagraph (A) with 
                respect to a qualified wildfire distribution from an 
                eligible retirement plan other than an individual 
                retirement plan, then the taxpayer shall, to the extent 
                of the amount of the contribution, be treated as having 
                received the qualified wildfire distribution in an 
                eligible rollover distribution (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 transfer within 60 days of the 
                distribution.
                    (C) Treatment of repayments for distributions from 
                iras.--For purposes of the Internal Revenue Code of 
                1986, if a contribution is made pursuant to 
                subparagraph (A) with respect to a qualified wildfire 
                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 contribution, the 
                qualified wildfire distribution 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 distribution.
            (4) Definitions.--For purposes of this subsection--
                    (A) Qualified wildfire distribution.--Except as 
                provided in paragraph (2), the term ``qualified 
                wildfire distribution'' means any distribution from an 
                eligible retirement plan made on or after October 8, 
                2017, and before January 1, 2019, to an individual 
                whose principal place of abode on October 8, 2017, is 
                located in the California wildfire disaster area and 
                who has sustained an economic loss by reason of the 
                wildfires to which the declaration of such area 
                relates.
                    (B) Eligible retirement plan.--The term ``eligible 
                retirement plan'' shall have the meaning given such 
                term by section 402(c)(8)(B) of the Internal Revenue 
                Code of 1986.
            (5) Income inclusion spread over 3-year period.--
                    (A) In general.--In the case of any qualified 
                wildfire distribution, unless the taxpayer elects not 
                to have this paragraph apply for any taxable year, any 
                amount required to be included in gross income for such 
                taxable year shall be so included ratably over the 3-
                taxable-year period beginning with such taxable year.
                    (B) Special rule.--For purposes of subparagraph 
                (A), rules similar to the rules of subparagraph (E) of 
                section 408A(d)(3) of the Internal Revenue Code of 1986 
                shall apply.
            (6) Special rules.--
                    (A) Exemption of distributions from trustee to 
                trustee transfer and withholding rules.--For purposes 
                of sections 401(a)(31), 402(f), and 3405 of the 
                Internal Revenue Code of 1986, qualified wildfire 
                distributions shall not be treated as eligible rollover 
                distributions.
                    (B) Qualified wildfire distributions treated as 
                meeting plan distribution requirements.--For purposes 
                the Internal Revenue Code of 1986, a qualified wildfire 
                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.
    (b) Recontributions of Withdrawals for Home Purchases.--
            (1) Recontributions.--
                    (A) In general.--Any individual who received a 
                qualified distribution may, during the period beginning 
                on October 8, 2017, and ending on April 30, 2018, 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 Internal 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.
                    (B) Treatment of repayments.--Rules similar to the 
                rules of subparagraphs (B) and (C) of subsection (a)(3) 
                shall apply for purposes of this subsection.
            (2) Qualified distribution.--For purposes of this 
        subsection, the term ``qualified distribution'' means any 
        distribution--
                    (A) described in section 401(k)(2)(B)(i)(IV), 
                403(b)(7)(A)(ii) (but only to the extent such 
                distribution relates to financial hardship), 
                403(b)(11)(B), or 72(t)(2)(F), of the Internal Revenue 
                Code of 1986,
                    (B) received after March 31, 2017, and before 
                November 15, 2017, and
                    (C) which was to be used to purchase or construct a 
                principal residence in the California wildfire disaster 
                area but which was not so purchased or constructed on 
                account of the wildfires to which the declaration of 
                such area relates.
    (c) Loans From Qualified Plans.--
            (1) 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 
        during the period beginning on the date of the enactment of 
        this Act and ending on December 31, 2018--
                    (A) clause (i) of section 72(p)(2)(A) of such Code 
                shall be applied by substituting ``$100,000'' for 
                ``$50,000'', and
                    (B) clause (ii) of such section shall be applied by 
                substituting ``the present value of the nonforfeitable 
                accrued benefit of the employee under the plan'' for 
                ``one-half of the present value of the nonforfeitable 
                accrued benefit of the employee under the plan''.
            (2) Delay of repayment.--In the case of a qualified 
        individual with an outstanding loan on or after October 8, 
        2017, from a qualified employer plan (as defined in section 
        72(p)(4) of the Internal Revenue Code of 1986)--
                    (A) 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 October 8, 2017, and ending on December 
                31, 2018, such due date shall be delayed for 1 year,
                    (B) any subsequent repayments with respect to any 
                such loan shall be appropriately adjusted to reflect 
                the delay in the due date under paragraph (1) and any 
                interest accruing during such delay, and
                    (C) 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 
                subparagraph (A) shall be disregarded.
            (3) Qualified individual.--For purposes of this subsection, 
        the term ``qualified individual'' means any individual whose 
        principal place of abode on October 8, 2017, is located in the 
        California wildfire disaster area and who has sustained an 
        economic loss by reason of wildfires to which the declaration 
        of such area relates.
    (d) Provisions Relating to Plan Amendments.--
            (1) In general.--If this subsection 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 paragraph 
        (2)(B)(i).
            (2) Amendments to which subsection applies.--
                    (A) In general.--This subsection shall apply to any 
                amendment to any plan or annuity contract which is 
                made--
                            (i) pursuant to any provision of this 
                        section, or pursuant to any regulation issued 
                        by the Secretary or the Secretary of Labor 
                        under any provision of this section, and
                            (ii) on or before the last day of the first 
                        plan year beginning on or after January 1, 
                        2019, or such later date as the Secretary may 
                        prescribe.
                In the case of a governmental plan (as defined in 
                section 414(d) of the Internal Revenue Code of 1986), 
                clause (ii) shall be applied by substituting the date 
                which is 2 years after the date otherwise applied under 
                clause (ii).
                    (B) Conditions.--This subsection shall not apply to 
                any amendment unless--
                            (i) during the period--
                                    (I) beginning on the date that this 
                                section or the regulation described in 
                                subparagraph (A)(i) takes effect (or in 
                                the case of a plan or contract 
                                amendment not required by this section 
                                or such regulation, the effective date 
                                specified by the plan), and
                                    (II) ending on the date described 
                                in subparagraph (A)(ii) (or, if 
                                earlier, the date the plan or contract 
                                amendment is adopted),
                the plan or contract is operated as if such plan or 
                contract amendment were in effect, and
                            (ii) such plan or contract amendment 
                        applies retroactively for such period.

SEC. 4. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS AFFECTED BY CALIFORNIA 
              WILDFIRES.

    (a) In General.--For purposes of section 38 of the Internal Revenue 
Code of 1986, in the case of an eligible employer, the California 
wildfire employee retention credit shall be treated as a credit listed 
in subsection (b) of such section. For purposes of this subsection, the 
California wildfire employee retention credit for any taxable year is 
an amount equal to 40 percent of the qualified wages with respect to 
each eligible employee of such employer for such taxable year. For 
purposes 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--
                    (A) which conducted an active trade or business on 
                October 8, 2017, in the California wildfire disaster 
                zone, and
                    (B) with respect to whom the trade or business 
                described in subparagraph (A) is inoperable on any day 
                after October 8, 2017, and before January 1, 2018, as a 
                result of damage sustained by reason of the wildfires 
                to which such declaration of such area relates.
            (2) Eligible employee.--The term ``eligible employee'' 
        means with respect to an eligible employer an employee whose 
        principal place of employment on October 8, 2017, with such 
        eligible employer was in the California wildfire disaster zone.
            (3) Qualified wages.--The term ``qualified wages'' means 
        wages (as defined in section 51(c)(1) of the Internal Revenue 
        Code of 1986, 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 October 8, 
        2017, and before January 1, 2018, 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 the wildfires to which the 
                declaration of the California wildfire disaster area 
                relates, and
                    (B) ending on the date on which such trade or 
                business has resumed significant operations at such 
                principal place of employment.
        Such term shall include wages paid without regard to whether 
        the employee performs no services, performs services at a 
        different place of employment than such principal place of 
        employment, or performs services at such principal place of 
        employment before significant operations have resumed.
    (c) Certain Rules To Apply.--For purposes of this section, rules 
similar to the rules of sections 51(i)(1) and 52, of the Internal 
Revenue Code of 1986, shall apply.
    (d) Employee Not Taken Into Account More Than Once.--An employee 
shall not be treated as an eligible 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 the Internal Revenue Code of 1986 
with respect to such employee for such period.

SEC. 5. ADDITIONAL DISASTER-RELATED TAX RELIEF PROVISIONS.

    (a) Temporary Suspension of Limitations on Charitable 
Contributions.--
            (1) In general.--Except as otherwise provided in paragraph 
        (2), subsection (b) of section 170 of the Internal Revenue Code 
        of 1986 shall not apply to qualified contributions and such 
        contributions shall not be taken into account for purposes of 
        applying subsections (b) and (d) of such section to other 
        contributions.
            (2) Treatment of excess contributions.--For purposes of 
        section 170 of the Internal Revenue Code of 1986--
                    (A) Individuals.--In the case of an individual--
                            (i) Limitation.--Any qualified contribution 
                        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 (G) of section 
                        170(b)(1) of such Code) over the amount of all 
                        other charitable contributions allowed under 
                        section 170(b)(1) of such Code.
                            (ii) 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 clause (i), such excess shall be 
                        added to the excess described in the portion of 
                        subparagraph (A) of such section which precedes 
                        clause (i) thereof for purposes of applying 
                        such section.
                    (B) Corporations.--In the case of a corporation--
                            (i) Limitation.--Any qualified contribution 
                        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.
                            (ii) Carryover.--Rules similar to the rules 
                        of subparagraph (A)(ii) shall apply for 
                        purposes of this subparagraph.
            (3) Exception to overall limitation on itemized 
        deductions.--So much of any deduction allowed under section 170 
        of the Internal Revenue Code of 1986 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.
            (4) Qualified contributions.--
                    (A) In general.--For purposes of this subsection, 
                the term ``qualified contribution'' means any 
                charitable contribution (as defined in section 170(c) 
                of the Internal Revenue Code of 1986) if--
                            (i) such contribution--
                                    (I) is paid during the period 
                                beginning on October 8, 2017, and 
                                ending on December 31, 2017, in cash to 
                                an organization described in section 
                                170(b)(1)(A) of such Code, and
                                    (II) is made for relief efforts in 
                                the California wildfire disaster area,
                            (ii) the taxpayer obtains from such 
                        organization contemporaneous written 
                        acknowledgment (within the meaning of section 
                        170(f)(8) of such Code) that such contribution 
                        was used (or is to be used) for relief efforts 
                        described in clause (i)(II), and
                            (iii) the taxpayer has elected the 
                        application of this subsection with respect to 
                        such contribution.
                    (B) Exception.--Such term shall not include a 
                contribution by a donor if the contribution is--
                            (i) to an organization described in section 
                        509(a)(3) of the Internal Revenue Code of 1986, 
                        or
                            (ii) for the establishment of a new, or 
                        maintenance of an existing, donor advised fund 
                        (as defined in section 4966(d)(2) of such 
                        Code).
                    (C) Application of election to partnerships and s 
                corporations.--In the case of a partnership or S 
                corporation, the election under subparagraph (A)(iii) 
                shall be made separately by each partner or 
                shareholder.
    (b) Special Rules for Qualified Disaster-Related Personal Casualty 
Losses.--
            (1) In general.--If an individual has a net disaster loss 
        for any taxable year--
                    (A) the amount determined under section 
                165(h)(2)(A)(ii) of the Internal Revenue Code of 1986 
                shall be equal to the sum of--
                            (i) such net disaster loss, and
                            (ii) so much of the excess referred to in 
                        the matter preceding clause (i) of section 
                        165(h)(2)(A) of such Code (reduced by the 
                        amount in clause (i) of this subparagraph) as 
                        exceeds 10 percent of the adjusted gross income 
                        of the individual,
                    (B) section 165(h)(1) of such Code shall be applied 
                by substituting ``$500'' for ``$500 ($100 for taxable 
                years beginning after December 31, 2009)'',
                    (C) the standard deduction determined under section 
                63(c) of such Code shall be increased by the net 
                disaster loss, and
                    (D) section 56(b)(1)(E) of such Code shall not 
                apply to so much of the standard deduction as is 
                attributable to the increase under subparagraph (C) of 
                this paragraph.
            (2) Net disaster loss.--For purposes of this subsection, 
        the term ``net disaster loss'' means the excess of qualified 
        disaster-related personal casualty losses over personal 
        casualty gains (as defined in section 165(h)(3)(A) of the 
        Internal Revenue Code of 1986).
            (3) Qualified disaster-related personal casualty losses.--
        For purposes of this subsection, the term ``qualified disaster-
        related personal casualty losses'' means losses described in 
        section 165(c)(3) of the Internal Revenue Code of 1986 which 
        arise in the California wildfire disaster area on or after 
        October 8, 2017, and which are attributable to the wildfires to 
        which the declaration of such area relates.
    (c) Special Rule for Determining Earned Income.--
            (1) In general.--In the case of a qualified individual, if 
        the earned income of the taxpayer for the taxable year which 
        includes the applicable date is less than the earned income of 
        the taxpayer for the preceding taxable year, the credits 
        allowed under sections 24(d) and 32 of the Internal Revenue 
        Code of 1986 may, at the election of the taxpayer, be 
        determined by substituting--
                    (A) such earned income for the preceding taxable 
                year, for
                    (B) such earned income for the taxable year which 
                includes October 8, 2017.
            (2) Qualified individual.--For purposes of this subsection, 
        the term ``qualified individual'' means any individual whose 
        principal place of abode on October 8, 2017, was located--
                    (A) in the California wildfire disaster zone, or
                    (B) in the California wildfire disaster area (but 
                outside the California wildfire disaster zone) and such 
                individual was displaced from such principal place of 
                abode by reason of the wildfires to which the 
                declaration of such area relates.
            (3) Earned income.--For purposes of this subsection, the 
        term ``earned income'' has the meaning given such term under 
        section 32(c) of the Internal Revenue Code of 1986.
            (4) Special rules.--
                    (A) Application to joint returns.--For purposes of 
                paragraph (1), in the case of a joint return for a 
                taxable year which includes October 8, 2017--
                            (i) such paragraph shall apply if either 
                        spouse is a qualified individual, and
                            (ii) the earned income of the taxpayer for 
                        the preceding taxable year shall be the sum of 
                        the earned income of each spouse for such 
                        preceding taxable year.
                    (B) Uniform application of election.--Any election 
                made under paragraph (1) shall apply with respect to 
                both sections 24(d) and 32, of the Internal Revenue 
                Code of 1986.
                    (C) Errors treated as mathematical error.--For 
                purposes of section 6213 of the Internal Revenue Code 
                of 1986, an incorrect use on a return of earned income 
                pursuant to paragraph (1) shall be treated as a 
                mathematical or clerical error.
                    (D) No effect on determination of gross income, 
                etc.--Except as otherwise provided in this subsection, 
                the Internal Revenue Code of 1986 shall be applied 
                without regard to any substitution under paragraph (1).

SEC. 6. BUDGETARY EFFECTS.

    (a) Emergency Designation.--This Act is designated as an emergency 
requirement pursuant to section 4(g) of the Statutory Pay-As-You-Go Act 
of 2010 (2 U.S.C. 933(g)).
    (b) Designation in Senate.--In the Senate, this Act is designated 
as an emergency requirement pursuant to section 403(a) of S. Con. Res. 
13 (111th Congress), the concurrent resolution on the budget for fiscal 
year 2010.
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