H.R. 4323 – Tax Revision Act of 2005

109th CONGRESS

1st Session

H. R. 4323

IN THE HOUSE OF REPRESENTATIVES

November 15, 2005

Mr. Thomas introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to extend certain expiring provisions, to provide certain hurricane-related tax relief, and for other purposes.

Short title, etc

(a)

Short title

This Act may be cited as the Tax Revision Act of 2005.

(b)

Amendment of 1986 Code

Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986.

(c)

Table of contents

The table of contents for this Act is as follows:

Sec. 1. Short title, etc

Sec. 2. Election to include combat pay as earned income for purposes of earned income credit

Sec. 3. Cover over of tax on distilled spirits

Sec. 4. Authority for undercover operations

Sec. 5. Disclosures of certain tax return information

Sec. 6. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico

Sec. 7. Federal guarantee of certain State bonds

Sec. 8. Certain tax relief related to Hurricanes Rita and Wilma

Sec. 9. Gulf Coast Recovery Bonds

Election to include combat pay as earned income for purposes of earned income credit

(a)

In general

Subclause (II) of section 32(c)(2)(B)(vi) is amended by striking January 1, 2006 and inserting January 1, 2007.

(b)

Effective date

The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 2005.

Cover over of tax on distilled spirits

(a)

In general

Paragraph (1) of section 7652(f) (relating to limitation on cover over of tax on distilled spirits) is amended by striking January 1, 2006 and inserting January 1, 2007.

(b)

Effective date

The amendment made by subsection (a) shall apply to articles brought into the United States after December 31, 2005.

Authority for undercover operations

Paragraph (6) of section 7608(c) (relating to application of section) is amended by striking January 1, 2006 both places is appears and inserting January 1, 2007.

Disclosures of certain tax return information

(a)

Disclosures to facilitate combined employment tax reporting

(1)

In general

Subparagraph (B) of section 6103(d)(5) (relating to termination) is amended by striking December 31, 2005 and inserting December 31, 2006.

(2)

Effective date

The amendment made by paragraph (1) shall apply to disclosures after December 31, 2005.

(b)

Disclosures relating to terrorist activities

(1)

In general

Clause (iv) of section 6103(i)(3)(C) and subparagraph (E) of section 6103(i)(7) are each amended by striking December 31, 2005 and inserting December 31, 2006.

(2)

Effective date

The amendments made by paragraph (1) shall apply to disclosures after December 31, 2005.

(c)

Disclosures relating to student loans

(1)

In general

Subparagraph (D) of section 6103(l)(13) (relating to termination) is amended by striking December 31, 2005 and inserting December 31, 2006.

(2)

Effective date

The amendment made by paragraph (1) shall apply to requests made after December 31, 2005.

Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico

(a)

In general

Subsection (d) of section 199 (relating to definitions and special rules) is amended by redesignating paragraph (7) as paragraph (8) and by inserting after paragraph (6) the following new paragraph:

(7)

Treatment of activities in Puerto Rico

In the case of any taxpayer with gross receipts for any taxable year from sources within the Commonwealth of Puerto Rico, if all of such receipts are taxable under section 1 or 11 for such taxable year, then for purposes of determining the domestic production gross receipts of such taxpayer for such taxable year under subsection (c)(4), the term United States shall include the Commonwealth of Puerto Rico

(b)

Effective date

The amendments made by subsection (a) shall apply to taxable years beginning after December 31, 2005.

Federal guarantee of certain State bonds

(a)

State bonds described

This section shall apply to a bond issued as part of an issue if—

(1)

the issue of which such bond is part is an issue of the State of Alabama, Louisiana, or Mississippi,

(2)

the bond is a general obligation of the issuing State and is in registered form,

(3)

the proceeds of the bond are distributed to one or more political subdivisions of the issuing State,

(4)

the maturity of such bond does not exceed 5 years,

(5)

the bond is issued after the date of the enactment of this Act and before January 1, 2008, and

(6)

the bond is designated by the Secretary of the Treasury for purposes of this section.

(b)

Application

(1)

In general

The Secretary of the Treasury may only designate a bond for purposes of this section pursuant to an application submitted to the Secretary by the State which demonstrates the need for such designation on the basis of the criteria specified in paragraph (2).

(2)

Criteria

For purposes of paragraph (1), the criteria specified in this paragraph are—

(A)

the loss of revenue base of one or more political subdivisions of the State by reason of Hurricane Katrina,

(B)

the need for resources to fund infrastructure within, or operating expenses of, any such political subdivision,

(C)

the lack of access of such political subdivision to capital, and

(D)

any other criteria as may be determined by the Secretary.

(3)

Guidance for submission and consideration of applications

The Secretary of the Treasury shall prescribe regulations or other guidance which provide for the time and manner for the submission and consideration of applications under this subsection.

(c)

Federal guarantee

A bond described in subsection (a) is guaranteed by the United States in an amount equal to 50 percent of the outstanding principal with respect to such bond.

(d)

Aggregate limit on bond designations

The maximum aggregate face amount of bonds which may be issued under this section shall not exceed $3,000,000,000.

Certain tax relief related to Hurricanes Rita and Wilma

(a)

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 the applicable date.

(2)

Qualified individual

For purposes of this subsection—

(A)

In general

The term qualified individual means any qualified Hurricane Rita individual and any qualified Hurricane Wilma individual.

(B)

Qualified Hurricane Rita individual

The term qualified Hurricane Rita individual means any individual (other than a qualified Hurricane Katrina individual) whose principal place of abode on September 23, 2005, was located—

(i)

in the Rita GO Zone, or

(ii)

in the Hurricane Rita disaster area (but outside the Rita GO Zone) and such individual was displaced from such principal place of abode by reason of Hurricane Rita.

(C)

Qualified Hurricane Wilma individual

The term qualified Hurricane Wilma individual means any individual (other than a qualified Hurricane Katrina individual or a qualified Hurricane Rita individual) whose principal place of abode on October 23, 2005, was located—

(i)

in the Wilma GO Zone, or

(ii)

in the Hurricane Wilma disaster area (but outside the Wilma GO Zone) and such individual was displaced from such principal place of abode by reason of Hurricane Wilma.

(D)

Qualified Hurricane Katrina individual

The term qualified Hurricane Katrina individual has the meaning given such term by section 406 of the Katrina Emergency Tax Relief Act of 2005.

(3)

Applicable date

For purposes of this subsection, the term applicable date means—

(A)

in the case of a qualified Hurricane Rita individual, September 23, 2005, and

(B)

in the case of a qualified Hurricane Wilma individual, October 23, 2005.

(4)

Rita and Wilma GO Zone; etc

For purposes of this subsection—

(A)

Rita GO Zone

The term Rita GO Zone means that portion of the Hurricane Rita 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 Hurricane Rita.

(B)

Hurricane Rita disaster area

The term Hurricane Rita disaster area means an area with respect to which a major disaster has been declared by the President, before October 6, 2005, under section 401 of such Act by reason of Hurricane Rita.

(C)

Wilma GO Zone

The term Wilma GO Zone means that portion of the Hurricane Wilma disaster area determined by the President to warrant individual or individual and public assistance from the Federal Government under such Act by reason of Hurricane Wilma.

(D)

Hurricane Wilma disaster area

The term Hurricane Wilma disaster area means an area with respect to which a major disaster has been declared by the President, before November 14, 2005, under section 401 of such Act by reason of Hurricane Wilma.

(5)

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.

(6)

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 the applicable date—

(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 section 24(d) and section 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).

(b)

Secretarial authority to make adjustments regarding taxpayer and dependency status

With respect to taxable years beginning in 2005 or 2006, the Secretary of the Treasury may make such adjustments in the application of the internal revenue laws as may be necessary to ensure that taxpayers do not lose any deduction or credit or experience a change of filing status by reason of temporary relocations by reason of Hurricane Rita or Hurricane Wilma. Any adjustments made under the preceding sentence shall ensure that an individual is not taken into account by more than one taxpayer with respect to the same tax benefit.

Gulf Coast Recovery Bonds

It is the sense of the Congress that the Secretary of the Treasury, or the Secretary’s delegate, should designate one or more series of bonds or certificates (or any portion thereof) issued under section 3105 of title 31, United States Code, as Gulf Coast Recovery Bonds in response to Hurricanes Katrina, Rita, and Wilma.

Tax Revision Act of 2005

Legislative Activity

Floor Debate

Bill Text