Title: National Disaster Tax Relief Act of 2017
Policy area: Taxation

Summary:
National Disaster Tax Relief Act of 2017
This bill amends the Internal Revenue Code to modify various tax deductions, credits, and requirements that affect disaster areas and U.S. possessions.
With respect to areas in which a federally declared disaster occurred from 2012 through 2022, the bill allows:
The bill permanently: (1) excludes from gross income disaster mitigation payments received from state and local governments, and (2) allows taxpayers to create tax-exempt catastrophe savings accounts to pay expenses related to a major disaster.
With respect to U.S. possessions, the bill:

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 1907 Introduced in Senate (IS)]

<DOC>






115th CONGRESS
  1st Session
                                S. 1907

 To amend the Internal Revenue Code of 1986 to provide tax relief for 
                disaster areas, and for other purposes.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                            October 3, 2017

  Mr. Nelson introduced the following bill; which was read twice and 
                  referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide tax relief for 
                disaster areas, and for other purposes.

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

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``National Disaster 
Tax Relief Act of 2017''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.
               TITLE I--TAX RELIEF RELATING TO DISASTERS

Sec. 101. Expensing of qualified disaster expenses.
Sec. 102. Net operating losses attributable to disasters.
Sec. 103. Increase in new markets tax credit for investments in 
                            community development entities serving 
                            disaster areas.
Sec. 104. Exclusions of certain cancellations of indebtedness by reason 
                            of disasters.
Sec. 105. Advanced refundings of certain tax-exempt bonds.
Sec. 106. Additional low-income housing credit allocations.
           TITLE II--PERMANENT DISASTER TAX RELIEF PROVISIONS

Sec. 201. Exclusion for disaster mitigation payments received from 
                            State and local governments.
Sec. 202. Catastrophe Savings Accounts.
               TITLE III--OTHER PERMANENT TAX PROVISIONS

Sec. 301. Repeal of limitation on cover over of distilled spirits taxes 
                            to Virgin Islands and Puerto Rico.
Sec. 302. Deduction for income attributable to domestic production 
                            activities in Puerto Rico made permanent.
Sec. 303. Refundable child tax credit parity for residents of Puerto 
                            Rico, American Samoa, Guam, the Northern 
                            Mariana Islands, and the Virgin Islands.
               TITLE IV--TREATMENT OF CERTAIN POSSESSIONS

Sec. 401. Treatment of possessions.

               TITLE I--TAX RELIEF RELATING TO DISASTERS

SEC. 101. EXPENSING OF QUALIFIED DISASTER EXPENSES.

    (a) In General.--Part VI of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 198 
the following:

``SEC. 198A. EXPENSING OF QUALIFIED DISASTER EXPENSES.

    ``(a) In General.--A taxpayer may elect to treat any qualified 
disaster expenses which are paid or incurred by the taxpayer as an 
expense which is not chargeable to capital account. Any expense which 
is so treated shall be allowed as a deduction for the taxable year in 
which it is paid or incurred.
    ``(b) Qualified Disaster Expense.--For purposes of this section--
            ``(1) In general.--The term `qualified disaster expense' 
        means any expenditure--
                    ``(A) which is paid or incurred in connection with 
                a trade or business or with business-related property,
                    ``(B) which is--
                            ``(i) for the abatement or control of 
                        hazardous substances that were released due to 
                        a federally declared disaster occurring during 
                        the period beginning on January 1, 2012, and 
                        ending on December 31, 2022,
                            ``(ii) for the removal of debris from, or 
                        the demolition of structures on, real property 
                        which is business-related property and which is 
                        damaged or destroyed as a result of a federally 
                        declared disaster occurring during such period, 
                        or
                            ``(iii) for the repair of business-related 
                        property damaged as a result of a federally 
                        declared disaster occurring during any such 
                        period, and
                    ``(C) which is otherwise chargeable to capital 
                account.
            ``(2) Special rule for replanting of citrus plants lost by 
        reason of casualty.--Amounts paid or incurred by a taxpayer in 
        any taxable year beginning after December 31, 2016, for the 
        replanting as described in section 263A(d)(2)(A) of citrus 
        plants which were lost or damaged, due to disease or to a 
        federally declared disaster, while such plants were in the 
        hands of a person other than the taxpayer shall be treated as a 
        qualified disaster expense of the taxpayer if--
                    ``(A) such other person has an equity interest of 
                not less than 50 percent in the replanted citrus plants 
                at all times during the taxable year in which such 
                amounts are paid or incurred, and the taxpayer holds 
                any part of the remaining equity interest, or
                    ``(B) the taxpayer acquired the entirety of such 
                other person's equity interest in the land on which the 
                lost or damaged citrus plants were located at the time 
                of such loss or damage, and the replanting is on such 
                land.
    ``(c) Other Definitions.--For purposes of this section--
            ``(1) Business-related property.--The term `business-
        related property' means property which is--
                    ``(A) held by the taxpayer for use in a trade or 
                business or for the production of income, or
                    ``(B) described in section 1221(a)(1) in the hands 
                of the taxpayer.
            ``(2) Federally declared disaster.--The term `federally 
        declared disaster' has the meaning given such term by section 
        165(i)(5)(A).
    ``(d) Deduction Recaptured as Ordinary Income on Sale, etc.--Solely 
for purposes of section 1245, in the case of property with respect to 
which a qualified disaster expense would have been capitalized but for 
this section--
            ``(1) the deduction allowed by this section for such 
        expense shall be treated as a deduction for depreciation, and
            ``(2) such property (if not otherwise section 1245 
        property) shall be treated as section 1245 property solely for 
        purposes of applying section 1245 to such deduction.
    ``(e) Coordination With Other Provisions.--Sections 198, 280B, and 
468 shall not apply to amounts which are treated as expenses not 
chargeable to capital account under this section.
    ``(f) Regulations.--The Secretary shall prescribe such regulations 
as may be necessary or appropriate to carry out the purposes of this 
section.
    ``(g) Termination.--This section shall not apply to amounts paid or 
incurred after December 31, 2023.''.
    (b) Clerical Amendment.--The table of sections for part VI of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting after the item relating to section 198 the 
following item:

``Sec. 198A. Expensing of qualified disaster expenses.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to amounts paid or incurred after the date of the enactment of 
this Act.

SEC. 102. NET OPERATING LOSSES ATTRIBUTABLE TO DISASTERS.

    (a) In General.--Section 172(b)(1) of the Internal Revenue Code of 
1986 is amended by adding at the end the following:
                    ``(G) Certain losses attributable to federally 
                declared disasters.--In the case of a taxpayer who has 
                a qualified disaster loss (as defined in subsection 
                (i)), such loss shall be a net operating loss carryback 
                to each of the 5 taxable years preceding the taxable 
                year of such loss.''.
    (b) Rules Relating to Qualified Disaster Losses.--Section 172 of 
the Internal Revenue Code of 1986 is amended by redesignating 
subsection (i) as subsection (j) and by inserting after subsection (h) 
the following:
    ``(i) Rules Relating to Qualified Disaster Losses.--For purposes of 
this section--
            ``(1) In general.--The term `qualified disaster loss' means 
        the lesser of--
                    ``(A) the sum of--
                            ``(i) the losses allowable under section 
                        165 for the taxable year--
                                    ``(I) attributable to a federally 
                                declared disaster (as defined in 
                                section 165(i)(5)(A)) occurring after 
                                December 31, 2011, and before January 
                                1, 2023, and
                                    ``(II) occurring in a disaster area 
                                (as defined in section 165(i)(5)(B)), 
                                and
                            ``(ii) the deduction for the taxable year 
                        for qualified disaster expenses which is 
                        allowable under section 198A(a), or which would 
                        be so allowable if not otherwise treated as an 
                        expense, or
                    ``(B) the net operating loss for the taxable year 
                in which the taxpayer had the losses described in 
                subparagraph (A).
            ``(2) Exclusion.--The term `qualified disaster loss' shall 
        not include any loss with respect to any property described in 
        section 1400N(p)(3).
            ``(3) Coordination with subsection (b)(2).--For purposes of 
        applying subsection (b)(2), a qualified disaster loss for any 
        taxable year shall be treated in a manner similar to the manner 
        in which a specified liability loss is treated.
            ``(4) Election.--Any taxpayer entitled to a 5-year 
        carryback under subsection (b)(1)(G) from any loss year may 
        elect to have the carryback period with respect to such loss 
        year determined without regard to subsection (b)(1)(G). Such 
        election shall be made in such manner as may be prescribed by 
        the Secretary and shall be made by the due date (including 
        extensions of time) for filing the taxpayer's return for the 
        taxable year of the net operating loss. Such election, once 
        made for any taxable year, shall be irrevocable for such 
        taxable year.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to losses arising in taxable years beginning after December 31, 
2011.

SEC. 103. INCREASE IN NEW MARKETS TAX CREDIT FOR INVESTMENTS IN 
              COMMUNITY DEVELOPMENT ENTITIES SERVING DISASTER AREAS.

    (a) In General.--Subsection (f) of section 45D of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
paragraph:
            ``(4) Increased special allocation for community 
        development entities serving disaster areas.--
                    ``(A) In general.--In the case of each calendar 
                year beginning after the date of the enactment of the 
                National Disaster Tax Relief Act of 2017 and before 
                January 1, 2023, for which there is a limitation under 
                paragraph (1), such limitation shall be increased by 
                $500,000,000, to be allocated among qualified community 
                development entities to make qualified low-income 
                community investments within any covered federally 
                declared disaster area.
                    ``(B) Allocation of increase.--The amount of the 
                increase in limitation under subparagraph (A) shall be 
                allocated by the Secretary under paragraph (2) to 
                qualified community development entities and shall give 
                priority to such entities with a record of having 
                successfully provided capital or technical assistance 
                to businesses or communities within any covered 
                federally declared disaster area or areas for which the 
                allocation is requested.
                    ``(C) Application of carryforward.--Paragraph (3) 
                shall be applied separately with respect to the amount 
                of any increase under subparagraph (A).
                    ``(D) Covered federally declared disaster area.--
                For purposes of this paragraph, the term `covered 
                federally declared disaster area' means any disaster 
                area with respect to which a federally declared 
                disaster is declared which occurs after December 31, 
                2011, and before January 1, 2023. For purposes of the 
                preceding sentence, the terms `federally declared 
                disaster' and `disaster area' have the meanings given 
                such terms in section 165(i)(5).''.
    (b) Effective Date.--The amendments made by this section shall 
apply to calendar years beginning after December 31, 2016.

SEC. 104. EXCLUSIONS OF CERTAIN CANCELLATIONS OF INDEBTEDNESS BY REASON 
              OF DISASTERS.

    (a) In General.--Section 108 of the Internal Revenue Code of 1986 
is amended by adding at the end the following new subsection:
    ``(j) Discharge of Indebtedness for Individuals Affected by 
Disasters.--
            ``(1) In general.--Except as provided in paragraph (2), 
        gross income shall not include any amount which (but for this 
        subsection) would be includible in gross income by reason of 
        any discharge (in whole or in part) of indebtedness of a 
        natural person described in paragraph (3) by an applicable 
        entity (as defined in section 6050P(c)(1)) during the 
        applicable period.
            ``(2) Exceptions for business indebtedness.--Paragraph (1) 
        shall not apply to any indebtedness incurred in connection with 
        a trade or business.
            ``(3) Persons described.--A natural person is described in 
        this paragraph if, with respect to any federally declared 
        disaster occurring after December 31, 2011, and before January 
        1, 2023, the principal place of abode of such person on the 
        applicable disaster date was located in the disaster area.
            ``(4) Applicable period.--For purposes of this subsection, 
        the term `applicable period' means the period beginning on the 
        applicable disaster date and ending on the date which is 24 
        months after such date.
            ``(5) Other definitions.--For purposes of this subsection--
                    ``(A) Federally declared disaster; disaster area.--
                The terms `federally declared disaster' and `disaster 
                area' have the meanings given such terms under section 
                165(i)(5).
                    ``(B) Applicable disaster date.--The term 
                `applicable disaster date' means, with respect to any 
                federally declared disaster, the date on which such 
                federally declared disaster occurs.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to discharges made on or after December 31, 2015.

SEC. 105. ADVANCED REFUNDINGS OF CERTAIN TAX-EXEMPT BONDS.

    (a) In General.--Section 149(d) of the Internal Revenue Code of 
1986 is amended by redesignating paragraph (7) as paragraph (8) and by 
inserting after paragraph (6) the following new paragraph:
            ``(7) Special rule with respect to certain natural 
        disasters.--
                    ``(A) In general.--With respect to a bond described 
                in subparagraph (C), 1 additional advance refunding 
                after the date of the enactment of the National 
                Disaster Tax Relief Act of 2017 and before January 1, 
                2023, shall be allowed under the rules of this 
                subsection if--
                            ``(i) the Governor of the State designates 
                        the advance refunding bond for purposes of this 
                        subsection, and
                            ``(ii) the requirements of subparagraph (E) 
                        are met.
                    ``(B) Certain private activity bonds.--Subparagraph 
                (A) shall apply with respect to a bond described in 
                subparagraph (C) which is an exempt facility bond 
                described in paragraph (1) or (2) of section 142(a) 
                notwithstanding paragraph (2) of this subsection.
                    ``(C) Bonds described.--A bond is described in this 
                paragraph if, with respect to any federally declared 
                disaster, such bond--
                            ``(i) was outstanding on the applicable 
                        disaster date, and
                            ``(ii) is issued by an applicable State or 
                        a political subdivision thereof.
                    ``(D) Aggregate limit.--The maximum aggregate face 
                amount of bonds outstanding on any applicable disaster 
                date which may be designated under this subsection by 
                the Governor of a State shall not exceed 
                $2,000,000,000.
                    ``(E) Additional requirements.--The requirements of 
                this subparagraph are met with respect to any advance 
                refunding of a bond described in subparagraph (C) if--
                            ``(i) no advance refundings of such bond 
                        would be allowed under this title on or after 
                        the applicable disaster date,
                            ``(ii) the advance refunding bond is the 
                        only other outstanding bond with respect to the 
                        refunded bond, and
                            ``(iii) the requirements of section 148 are 
                        met with respect to all bonds issued under this 
                        paragraph.
                    ``(F) Definitions.--For purposes of this 
                subsection--
                            ``(i) Federally declared disaster; disaster 
                        area.--The terms `federally declared disaster' 
                        and `disaster area' have the meanings given 
                        such terms under section 165(i)(5).
                            ``(ii) Applicable disaster date.--The term 
                        `applicable disaster date' means, with respect 
                        to any federally declared disaster, the date on 
                        which such federally declared disaster occurs.
                            ``(iii) Applicable state.--The term 
                        `applicable State' means, with respect to any 
                        federally declared disaster, any State in which 
                        a portion of the disaster area is located.''.
    (b) Effective Date.--The amendment made by this section shall apply 
to bonds issued after the date of the enactment of this Act.

SEC. 106. ADDITIONAL LOW-INCOME HOUSING CREDIT ALLOCATIONS.

    (a) In General.--Paragraph (3) of section 42(h) of the Internal 
Revenue Code of 1986 is amended by adding at the end the following new 
subparagraph:
                    ``(J) Increase in state housing credit for states 
                damaged by natural disasters.--
                            ``(i) In general.--In the case of any 
                        calendar year beginning after the date of the 
                        enactment of the National Disaster Tax Relief 
                        Act of 2017 and before January 1, 2023, the 
                        State housing credit ceiling of each State any 
                        portion of which includes any portion of a 
                        qualifying disaster area shall be increased by 
                        so much of the aggregate housing credit dollar 
                        amount as does not exceed the applicable 
                        limitation allocated by the State housing 
                        credit agency of such State for such calendar 
                        year to buildings located in qualifying 
                        disaster areas.
                            ``(ii) Applicable limitation.--For purposes 
                        of clause (i), the applicable limitation is the 
                        greater of--
                                    ``(I) $8 multiplied by the 
                                population of the qualifying disaster 
                                areas in such State, or
                                    ``(II) 50 percent of the State 
                                housing credit ceiling (determined 
                                without regard to this subparagraph) 
                                for 2017.
                            ``(iii) Applicable percentage.--For 
                        purposes of this section, the applicable 
                        percentage with respect to any building to 
                        which amounts are allocated under clause (i) 
                        shall be determined under subsection (b)(2).
                            ``(iv) Allocations treated as made first 
                        from additional allocation amount for purposes 
                        of determining carryover.--For purposes of 
                        determining the unused State housing credit 
                        ceiling under subparagraph (C) for any calendar 
                        year, any increase in the State housing credit 
                        ceiling under clause (i) shall be treated as an 
                        amount described in clause (ii) of such 
                        subparagraph.
                            ``(v) Qualifying disaster area.--For 
                        purposes of this subparagraph, the term 
                        `qualifying federally declared disaster area' 
                        means--
                                    ``(I) each county which is 
                                determined to warrant individual or 
                                individual and public assistance from 
                                the Federal Government under a 
                                qualifying natural disaster declaration 
                                described in clause (vi)(I), and
                                    ``(II) each county not described in 
                                subclause (I) which is included in the 
                                geographical area covered by a 
                                qualifying natural disaster declaration 
                                described in subclause (II) or (III) of 
                                clause (vi).
                            ``(vi) Qualifying natural disaster 
                        declaration.--For purposes of clause (v), the 
                        term `qualifying natural disaster declaration' 
                        means--
                                    ``(I) a federally declared disaster 
                                (as defined in section 165(i)(5)) 
                                occurring after December 31, 2011, and 
                                before January 1, 2023, or
                                    ``(II) a natural disaster declared 
                                by the Secretary of Agriculture.''.
    (b) Eligibility for Difficult Development Area.--For purposes of 
section 42 of the Internal Revenue Code of 1986, any area located in a 
disaster area (as defined in section 165(i)(5)(B) of the Internal 
Revenue Code of 1986) shall be designated a difficult development area 
for purposes of section 42(d)(5)(B)(iii) of such Code for any 24-month 
period following the date of a federally declared disaster, if the area 
qualifies to be such a difficult development area at any time within 
such 24-month period.
    (c) Effective Date.--The amendment made by this section shall take 
effect on the date of the enactment of this Act.

           TITLE II--PERMANENT DISASTER TAX RELIEF PROVISIONS

SEC. 201. EXCLUSION FOR DISASTER MITIGATION PAYMENTS RECEIVED FROM 
              STATE AND LOCAL GOVERNMENTS.

    (a) In General.--Paragraph (2) of section 139(g) of the Internal 
Revenue Code of 1986 is amended by inserting ``, or any other amount 
which is paid by a State or local government or an agency or 
instrumentality thereof,'' after ``(as in effect on such date)''.
    (b) Effective Date.--The amendment made by this section shall apply 
to payments received after the date of the enactment of this Act.

SEC. 202. CATASTROPHE SAVINGS ACCOUNTS.

    (a) In General.--Subchapter F of chapter 1 of the Internal Revenue 
Code of 1986 is amended by adding at the end the following new part:

                ``PART IX--CATASTROPHE SAVINGS ACCOUNTS

``SEC. 530A. CATASTROPHE SAVINGS ACCOUNTS.

    ``(a) General Rule.--A Catastrophe Savings Account shall be exempt 
from taxation under this subtitle. Notwithstanding the preceding 
sentence, such account shall be subject to the taxes imposed by section 
511 (relating to imposition of tax on unrelated business income of 
charitable organizations).
    ``(b) Catastrophe Savings Account.--For purposes of this section, 
the term `Catastrophe Savings Account' means a trust created or 
organized in the United States for the exclusive benefit of an 
individual or the individual's beneficiaries and which is designated 
(in such manner as the Secretary shall prescribe) at the time of the 
establishment of the trust as a Catastrophe Savings Account, but only 
if the written governing instrument creating the trust meets the 
following requirements:
            ``(1) Except in the case of a qualified rollover 
        contribution--
                    ``(A) no contribution will be accepted unless it is 
                in cash, and
                    ``(B) contributions will not be accepted in excess 
                of the account balance limit specified in subsection 
                (c).
            ``(2) The trustee is a bank (as defined in section 408(n)) 
        or another person who demonstrates to the satisfaction of the 
        Secretary that the manner in which that person will administer 
        the trust will be consistent with the requirements of this 
        section.
            ``(3) The interest of an individual in the balance of the 
        individual's account is nonforfeitable.
            ``(4) The assets of the trust shall not be commingled with 
        other property except in a common trust fund or common 
        investment fund.
    ``(c) Account Balance Limit.--
            ``(1) In general.--The aggregate account balance for all 
        Catastrophe Savings Accounts maintained for the benefit of an 
        individual (including qualified rollover contributions) shall 
        not exceed--
                    ``(A) in the case of an individual whose qualified 
                deductible is not more than $1,000, $75,000, and
                    ``(B) in the case of an individual whose qualified 
                deductible is more than $1,000, $150,000.
            ``(2) Qualified deductible.--For purposes of this 
        subsection, with respect to an individual, the term `qualified 
        deductible' means the annual deductible for the individual's 
        homeowners' insurance policy.
    ``(d) Qualified Rollover Contribution.--For purposes of this 
section, the term `qualified rollover contribution' means a 
contribution to a Catastrophe Savings Account--
            ``(1) from another such account of the same beneficiary, 
        but only if such amount is contributed not later than the 60th 
        day after the distribution from such other account, and
            ``(2) from a Catastrophe Savings Account of a spouse of the 
        beneficiary of the account to which the contribution is made, 
        but only if such amount is contributed not later than the 60th 
        day after the distribution from such other account.
    ``(e) Tax Treatment of Distributions.--
            ``(1) In general.--Any distribution from a Catastrophe 
        Savings Account shall be includible in the gross income of the 
        distributee in the manner provided in section 72.
            ``(2) Distributions for qualified catastrophe expenses.--
                    ``(A) In general.--No amount shall be includible in 
                gross income under paragraph (1) if the aggregate 
                distributions during the taxable year do not exceed the 
                qualified catastrophe expenses of the distributee 
                during such taxable year.
                    ``(B) Distributions in excess of expenses.--If such 
                aggregate distributions exceed such expenses during the 
                taxable year, the amount otherwise includible in gross 
                income under paragraph (1) shall be reduced by the 
                amount which bears the same ratio to the amount which 
                would be includible in gross income under paragraph (1) 
                (without regard to this subparagraph) as the qualified 
                catastrophe expenses bear to such aggregate 
                distributions.
            ``(3) Additional tax for distributions not used for 
        qualified catastrophe expenses.--The tax imposed by this 
        chapter for any taxable year on any taxpayer who receives a 
        payment or distribution from a Catastrophe Savings Account 
        which is includible in gross income shall be increased by 10 
        percent of the amount which is so includible.
            ``(4) Qualified catastrophe expenses.--For purposes of this 
        subsection, the term `qualified catastrophe expenses' means 
        expenses paid or incurred by reason of a major disaster that 
        has been declared by the President under section 401 of the 
        Robert T. Stafford Disaster Relief and Emergency Assistance 
        Act.
            ``(5) Exception for retirement distributions.--No amount 
        shall be includible in gross income under paragraph (1) (or 
        subject to an additional tax under paragraph (3)) if the 
        payment or distribution is made on or after the date on which 
        the distributee attains age 62.
    ``(f) Tax Treatment of Accounts.--Rules similar to the rules of 
paragraphs (2) and (4) of section 408(e) shall apply to any Catastrophe 
Savings Account.''.
    (b) Tax on Excess Contributions.--
            (1) In general.--Subsection (a) of section 4973 of the 
        Internal Revenue Code of 1986 is amended by striking ``or'' at 
        the end of paragraph (5), by inserting ``or'' at the end of 
        paragraph (6), and by inserting after paragraph (6) the 
        following new paragraph:
            ``(7) a Catastrophe Savings Account (as defined in section 
        530A(b)),''.
            (2) Excess contribution.--Section 4973 of such Code is 
        amended by adding at the end the following new subsection:
    ``(i) Excess Contributions to Catastrophe Savings Accounts.--For 
purposes of this section, in the case of a Catastrophe Savings Account 
(as defined in section 530A(b)), the term `excess contributions' means 
the amount by which the aggregate account balance for all Catastrophe 
Savings Accounts maintained for the benefit of an individual exceeds 
the account balance limit under section 530A(c)(1).''.
    (c) Conforming Amendment.--The table of parts for subchapter F of 
chapter 1 of the Internal Revenue Code of 1986 is amended by adding at 
the end the following new item:

               ``Part IX--Catastrophe Savings Accounts''.

    (d) Contributions From Insurance Companies.--Subsection (c) of 
section 832 of the Internal Revenue Code of 1986 is amended by striking 
``and'' at the end of paragraph (12), by striking the period at the end 
of paragraph (13) and inserting ``; and'', and by adding at the end the 
following new paragraph:
            ``(14) contributions to a Catastrophe Savings Account (as 
        defined in section 530A(b)) during the taxable year to the 
        extent such contributions are not excess contributions (as 
        defined in section 4973(i)).''.
    (e) Custodial Accounts Treated as Trust.--For purposes of this 
section, a custodial account shall be treated as a trust if--
            (1) the assets of such account are held by a bank (as 
        defined in section 408(n) of the Internal Revenue Code of 1986) 
        or another person who demonstrates, to the satisfaction of the 
        Secretary of the Treasury, that the manner in which such person 
        will administer the account will be consistent with the 
        requirements of this section, and
            (2) the custodial account would, except for the fact that 
        it is not a trust, constitute a Catastrophe Savings Account (as 
        defined in section 530A(b) of the Internal Revenue Code of 
        1986).
In the case of a custodial account treated as a trust by reason of the 
preceding sentence, the custodian of such account shall be treated as 
the trustee thereof for purposes of the Internal Revenue Code of 1986.
    (f) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2017.

               TITLE III--OTHER PERMANENT TAX PROVISIONS

SEC. 301. REPEAL OF LIMITATION ON COVER OVER OF DISTILLED SPIRITS TAXES 
              TO VIRGIN ISLANDS AND PUERTO RICO.

    (a) In General.--Section 7652 of the Internal Revenue Code of 1986 
is amended by striking subsection (f) and by redesignating subsections 
(g) and (h) as subsections (f) and (g), respectively.
    (b) Effective Date.--The amendments made by this section shall 
apply to distilled spirits brought into the United States after 
December 31, 2016.

SEC. 302. DEDUCTION FOR INCOME ATTRIBUTABLE TO DOMESTIC PRODUCTION 
              ACTIVITIES IN PUERTO RICO MADE PERMANENT.

    (a) In General.--Section 199(d)(8) of the Internal Revenue Code of 
1986 is amended by striking subparagraph (C).
    (b) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2016.

SEC. 303. REFUNDABLE CHILD TAX CREDIT PARITY FOR RESIDENTS OF PUERTO 
              RICO, AMERICAN SAMOA, GUAM, THE NORTHERN MARIANA ISLANDS, 
              AND THE VIRGIN ISLANDS.

    (a) Treatment of Non-Mirror Code Possessions.--Section 24(d) of the 
Internal Revenue Code of 1986 is amended by inserting after paragraph 
(2) the following new paragraph:
            ``(3) Special rule for puerto rico and american samoa.--In 
        the case of an individual who is a bona fide resident of Puerto 
        Rico or American Samoa during the entire taxable year--
                    ``(A) paragraph (1)(B)(i) shall not apply, and
                    ``(B) paragraph (1)(B)(ii) shall be applied without 
                regard to the number of qualifying children of the 
                taxpayer.''.
    (b) Treatment of Mirror Code Possessions.--
            (1) In general.--The Secretary of the Treasury shall pay to 
        each mirror code possession of the United States amounts equal 
        to the loss to that possession by reason of the application of 
        section 24(d) of the Internal Revenue Code of 1986 (determined 
        as if paragraph (3) thereof, as added by this section, applied 
        to bona fide residents of that possession) with respect to 
        taxable years beginning after December 31, 2017. Such amounts 
        shall be determined by the Secretary of the Treasury based on 
        information provided by the government of the respective 
        possession.
            (2) Possession of the united states.--For purposes of this 
        subsection, the term ``mirror code possession of the United 
        States'' means Guam, the Northern Mariana Islands, and the 
        Virgin Islands.
            (3) Treatment of payments.--For purposes of section 
        1324(b)(2) of title 31, United States Code, the payments under 
        this subsection shall be treated in the same manner as a refund 
        due from the credit allowed under section 24 of the Internal 
        Revenue Code of 1986 by reason of subsection (d) of such 
        section.
    (c) Effective Date.--The amendment made by this section shall apply 
to taxable years beginning after December 31, 2017.

               TITLE IV--TREATMENT OF CERTAIN POSSESSIONS

SEC. 401. TREATMENT OF POSSESSIONS.

    (a) Payments to Possessions.--
            (1) Mirror code possessions.--The Secretary of the Treasury 
        shall pay to each possession of the United States with a mirror 
        code tax system amounts equal to the loss to that possession by 
        reason of the application of sections 101, 104, and 201. Such 
        amounts shall be determined by the Secretary of the Treasury 
        based on information provided by the government of the 
        respective possession.
            (2) Other possessions.--The Secretary of the Treasury shall 
        pay to each possession of the United States which does not have 
        a mirror code tax system amounts estimated by the Secretary of 
        the Treasury as being equal to the aggregate benefits that 
        would have been provided to residents of such possession by 
        reason of the application of sections 101, 104, and 201 if a 
        mirror code tax system had been in effect in such possession. 
        The preceding sentence shall not apply with respect to any 
        possession of the United States unless such possession has a 
        plan, which has been approved by the Secretary of the Treasury, 
        under which such possession will promptly distribute such 
        payments to the residents of such possession.
    (b) Coordination With Credit Allowed Against United States Income 
Taxes.--No increase in any credit, deduction, or exclusion determined 
under section 198A, 108(j), or 139(g) of the Internal Revenue Code of 
1986 against United States income taxes for any taxable year shall be 
taken into account with respect to any person--
            (1) to whom the corresponding credit, deduction, or 
        exclusion is allowed against taxes imposed by the possession by 
        reason of section 101, 104, or 201, whichever is applicable, 
        for such taxable year, or
            (2) who is eligible for a payment under a plan described in 
        subsection (a)(2) with respect to such credit, deduction, or 
        exclusion for the taxable year.
    (c) Definitions and Special Rules.--
            (1) Possession of the united states.--For purposes of this 
        subsection, the term ``possession of the United States'' 
        includes the Commonwealth of Puerto Rico and the Commonwealth 
        of the Northern Mariana Islands.
            (2) Mirror code tax system.--For purposes of this 
        subsection, the term ``mirror code tax system'' means, with 
        respect to any possession of the United States, the income tax 
        system of such possession if the income tax liability of the 
        residents of such possession under such system is determined by 
        reference to the income tax laws of the United States as if 
        such possession were the United States.
            (3) Treatment of payments.--For purposes of section 
        1324(b)(2) of title 31, United States Code, rules similar to 
        the rules of section 1001(b)(3)(C) of the American Recovery and 
        Reinvestment Tax Act of 2009 shall apply.
                                 <all>