Stop Taxing Death and Disability Act

Bill: 115-s-405
Sponsor: full_name: Sen. Coons, Christopher A. [D-DE]
Introduced: 2017-02-16
Policy area: Taxation
Subjects: Disability and paralysis

Higher education

Income tax exclusion

Student aid and college costs
Latest action: action_date: 2017-02-16
text: Read twice and referred to the Committee on Finance.

Summaries:
action_date: 2017-02-16
action_desc: Introduced in Senate
text: <p><b>Stop Taxing Death and Disability Act </b></p> <p>This bill amends the Internal Revenue Code to exclude from the gross income of an individual the discharge of student loans or private education loans due to the death or disability of the student.</p> <p>The bill also amends the Higher Education Act of 1965 to require the Department of Education (ED) to discharge the liability on loans that parents received on behalf of a student who: (1) has become permanently and totally disabled, or (2) is unable to engage in any substantial gainful activity due to a physical or mental impairment that can be expected to result in death or has lasted or is expected to last continuously for at least 60 months. (Under current law, ED is required to discharge the loans to parents if the student dies.) </p>

tv_txt: II 115th CONGRESS 1st Session S. 405 IN THE SENATE OF THE UNITED STATES February 16, 2017 Mr. Coons (for himself, Mr. King , Mr. Portman , Ms. Stabenow , Mr. Isakson , Mr. Blumenthal , Mr. Hoeven , Mr. Carper , Mr. Gardner , Mr. Kaine , Mrs. Feinstein , Mrs. Murray , and Ms. Collins ) 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 and the Higher Education Act of 1965 to provide an exclusion from income for student loan forgiveness for students who have died or become disabled.

1. Short title This Act may be cited as the Stop Taxing Death and Disability Act . 2. Treatment of student loans discharged on account of death or disability (a) Amendments to Internal Revenue Code of 1986 (1) In general Section 108(f) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph: (5) Discharges on account of death or disability (A) In general In the case of an individual, gross income does not include any amount which (but for this subsection) would be includible in gross income by reasons of the discharge (in whole or in part) of any loan described in subparagraph (B) if such discharge was— (i) pursuant to subsection (a) or (d) of section 437 of the Higher Education Act of 1965 or the parallel benefit under part D of title IV of such Act (relating to the repayment of loan liability), (ii) pursuant to section 464(c)(1)(F) of such Act, or (iii) otherwise discharged on account of the death or total and permanent disability of the student. (B) Loans described A loan is described in this subparagraph if such loan is— (i) a student loan (as defined in paragraph (2)), or (ii) a private education loan (as defined in section 140(7) of the Consumer Credit Protection Act ( 15 U.S.C. 1650(7) )). . (2) Effective date The amendment made by this section shall apply to discharges of indebtedness after December 31, 2016. (b) Amendment to the Higher Education Act of 1965 Section 437(d) of the Higher Education Act of 1965 ( 20 U.S.C. 1087(d) ) is amended by inserting or becomes permanently and totally disabled (as determined in accordance with regulations of the Secretary), or if the student is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, has lasted for a continuous period of not less than 60 months, or can be expected to last for a continuous period of not less than 60 months after dies .