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H.R. 3823: Disaster Tax Relief and Airport and Airway Extension Act of 2017

The bill reauthorizes the Federal Aviation Administration (FAA) for six months, provides certain tax benefits for victims of Hurricanes Harvey, Irma, and Maria, reauthorizes certain expiring health programs, and includes provisions to increase the availability of private flood insurance for individuals in flood zones.

Federal Aviation Administration Reauthorization—The bill extends the authorization of the FAA and other Federal aviation programs through March 31, 2018 at FY2017 appropriated levels. The bill also extends the collection of aviation taxes, which are deposited in the Airport and Airway Trust Fund and used to fund the agency. The current FAA authorization is set to expire on September 30, 2017.

Reauthorizing Certain Expiring Health Programs— The bill also provides for an extension for several expiring medical programs, including reauthorizing the Teaching Health Center Graduate Medical Education Program (authorized at $15 million for the first quarter of FY 2018), the Special Diabetes Program for Indians (authorized at $37.5 million for the first quarter of FY 2018), and the Medicare Patient Intravenous Immunoglobulin Demonstration Project through December 31, 2020. The bill reduces the Medicare Improvements Fund by $50 million in order to offset the cost of the short term extensions

The Private Flood Insurance Market Development Act of 2017—The bill updates current law to reinforce and strengthen requirements that flood insurance provided by private sector insurance carriers shall be accepted and considered similar to those polices offered by the National Flood Insurance Program (NFIP) to meet mandatory purchase requirements under current law for certain home owners in flood zones.

Tax Relief for Hurricanes Harvey, Irma, and Maria—The bill provides several temporary tax benefits to individuals affected by Hurricanes Harvey, Irma, and Maria.

Retirement Account Tax Provisions--The bill provides an exception to the 10-percent early retirement plan withdrawal penalty for qualified hurricane relief distributions. The bill also allows for the re-contribution of retirement plan withdrawals for home purchases cancelled due to eligible disasters. The bill increases the limit on loans not treated as retirement distributions from $50,000 to $100,000.

Employee Retention Credit for Employers--The bill provides a tax credit for 40% of wages (up to $6,000 per employee) paid by a disaster-affected employer to an employee from a core disaster area.

Charitable Deduction--The bill temporarily suspends limitations on charitable contributions associated with qualified hurricane relief made before December 31, 2017.

Qualified Disaster-Related Personal Casualty Losses Deduction--With respect to losses arising in the disaster area, the bill eliminates the requirement that personal casualty losses must exceed 10% of Adjusted Gross Income to qualify for deduction, and eliminates current law requirement for taxpayers to itemize.

Special Rule for Determining the Earned Income Tax Credit and the Child Tax Credit—At the election of the taxpayer, the bill allows individuals to refer to earned income from the immediately preceding year for purposes of determining the Earned Income Tax Credit and the Child Tax Credit. These credits can increase as income increases up to a certain level for certain taxpayers. Many individuals were not able to work during these Hurricanes and as a result may have a lower income for taxable year 2017.

The bill designates tax relief provisions in this bill as an emergency requirement pursuant to the Statutory Pay-As-You-Go Act of 2010 (Statutory PAYGO) and pursuant to the concurrent resolution on the budget.

Last updated Oct 3, 2017. Source: Republican Policy Committee

The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Sep 30, 2017.


Disaster Tax Relief and Airport and Airway Extension Act of 2017

TITLE I--FEDERAL AVIATION PROGRAMS

Sec. 101) This bill reauthorizes for the period October 1, 2017, through March 31, 2018, the airport improvement program.

(Sec. 102) The following expiring authorities are extended through March 31, 2018:

the competition disclosure requirement under a development project grant for a large hub airport or a medium hub airport; the eligibility for small airport grants of sponsors of airports in the Republic of the Marshall Islands, Federated States of Micronesia, and Republic of Palau; the air traffic control contract program; state and local government compatible land use planning and projects; Federal Aviation Administration (FAA) operations; the essential air service program and small community air service development program; Department of Transportation (DOT) authority to appropriate funds to acquire, establish, and improve air navigation facilities; and civil aviation research and development. The DOT requirement to apportion amounts for airport planning and development and noise compatibility planning and programs to sponsors of primary airports based on the number of passenger boardings is extended through FY2018.

The bill amends the Vision 100--Century of Aviation Reauthorization Act to extend through March 31, 2018:

the authorization for airport development at Midway Island Airport, and the authority of any final order with respect to the eligibility for essential air service compensation. The bill amends the FAA Modernization and Reform Act of 2012 to extend through:

FY2018, the requirement for an Inspector General report on participation in FAA programs by disadvantaged small business concerns; and March 31, 2018, the pilot program for the redevelopment of airport properties, and the advisory committee for aviation consumer protection. The bill amends the FAA Extension, Safety, and Security Act of 2016 to extend through March 31, 2018, the prohibition against the FAA discontinuing the contract weather observer program at any airport.

TITLE II--AVIATION REVENUE PROVISIONS

(Sec. 201) The bill amends the Internal Revenue Code to extend through March 31, 2018, the expenditure authority from the Airport and Airway Trust Fund.

(Sec. 202) The excise taxes on aviation fuels and the transportation of persons and property by air are extended through March 31, 2018.

TITLE III--EXPIRING HEALTH PROVISIONS

(Sec. 301) This section amends the Public Health Service Act to extend through the first quarter of FY2018: (1) the Teaching Health Center Graduate Medical Education Program, and (2) the Special Diabetes Program for Indians.

(The Teaching Health Center Graduate Medical Education Program provides payments to outpatient facilities to support training in primary care for medical and dental residents. The Special Diabetes Program for Indians provides funding for the Indian Health Service to award grants for the prevention and treatment of diabetes for American Indians and Alaska Natives.)

(Sec. 302) This section amends the Medicare IVIG Access and Strengthening Medicare and Repaying Taxpayers Act of 2012 to extend through 2020 the Medicare Patient Intravenous Immunoglobulin (IVIG) Demonstration Project. (The project provides payments to Medicare beneficiaries for items and services needed for the in-home administration of IVIG for the treatment of primary immune deficiency diseases. Immunoglobulin therapy is used to temporarily replace some of the antibodies that are missing or not working properly in people with the diseases.)

(Sec. 303) This section amends title XVIII (Medicare) of the Social Security Act to reduce funding for the Medicare Improvement Fund during and after FY2021.

TITLE V--TAX RELIEF FOR HURRICANES HARVEY, IRMA, AND MARIA

This title amends the Internal Revenue Code to allow various tax credits, deductions, and modifications to existing rules for individuals and businesses affected by Hurricanes Harvey, Irma, and Maria.

(Sec. 501) This section specifies the areas and zones that are eligible for the tax provisions included in this title based on Presidential declarations under the Robert T. Stafford Disaster Relief and Emergency Assistance Act for Hurricanes Harvey, Irma, and Maria before September 21, 2017.

(Sec. 502) This section waives the 10% additional tax on early distributions from retirement plans for up to $100,000 in distributions made on or after August 23, 2017, and before January 1, 2019.

The distributions must be made to an individual: (1) whose principal place of abode on specified dates was in a hurricane disaster area, and (2) who has sustained an economic loss by reason of Hurricanes Harvey, Irma, or Maria.

A taxpayer who has received such a distribution may: (1) repay the distribution by making additional contributions to a retirement account within three years, and (2) include the distribution in gross income by dividing the amount over a three-year period.

This section also: (1) permits individuals to recontribute funds to retirement plans if the funds were distributed for a home purchase in a hurricane disaster area that was cancelled on account of the hurricanes, and (2) increases the limit and extends the repayment deadline for loans from retirement plans.

(Sec. 503) This section allow an employee retention tax credit for employers affected by the hurricanes. The credit is equal to 40% of the qualified wages (up to $6,000 per employee) paid to an employee whose principal place of employment on specified dates was in a hurricane disaster zone.

"Qualified wages" include wages that: (1) are paid or incurred on or after August 23, 2017, and before January 1, 2018; and (2) occurred during the period that begins when the trade or business became inoperable at the principal place of employment of the employee immediately before the hurricane and ends when the trade or business has resumed significant operations.

(Sec. 504) The bill modifies the deduction for charitable contributions to temporarily suspend the limitations on charitable contributions made before December 31, 2017, for relief efforts in the hurricane disaster areas.

The bill modifies the deduction for personal casualty losses in the hurricane disaster areas to eliminate: (1) the requirement for losses to exceed 10% of adjusted gross income to qualify for the deduction, and (2) the requirement to itemize.

For the purposes of determining earned income for the earned income tax credit and the child tax credit, taxpayers in the hurricane disaster areas may use earned income from the immediately preceding years.

The Department of the Treasury must pay: (1) to the U.S. Virgin Islands amounts equal to the loss in revenues to the U.S. Virgin Islands by reason of the provisions of this title, and (2) to Puerto Rico amounts equal to the aggregate benefits that would have been provided to residents of Puerto Rico by reason of the provisions of this title if a mirror code tax system had been in effect in Puerto Rico.

(Sec. 505) The bill designates this title as an emergency requirement pursuant to the Statutory Pay-As-You-Go Act of 2010 (PAYGO) and the FY2010 congressional budget resolution.