S. 1907Senate115th Congress (2017-2019)In Committee

National Disaster Tax Relief Act of 2017

AI-Generated Summary

Updated April 15, 2026 at 6:17 PM UTC

The National Disaster Tax Relief Act of 2017 changes the tax code to give businesses and individuals affected by federally declared disasters a range of tax benefits. It lets them deduct disaster‑related costs right away, expands loss carrybacks, boosts credits for low‑income housing and community development, and creates new tax‑free savings accounts for disaster expenses. The bill also adds permanent relief provisions for U.S. territories and other possessions.

Key Provisions

Taxpayers can elect to expense qualified disaster costs (cleanup, debris removal, repairs) immediately instead of capitalizing them.
Net operating losses caused by disasters can be carried back five years.
The New Markets Tax Credit limit is increased by $500 billion for community‑development entities serving disaster areas.
Discharge of debt for individuals living in disaster zones is excluded from taxable income for 24 months.
States can get one extra advance refunding of certain tax‑exempt bonds after a disaster, up to $2 billion total.
State low‑income housing credit ceilings are raised for states with disaster‑damaged areas, based on population or a percentage of the existing ceiling.
Payments from state or local governments for disaster mitigation are excluded from taxable income.
Creates tax‑free “Catastrophe Savings Accounts” for individuals, with contribution limits tied to homeowners’ insurance deductibles and special tax treatment of withdrawals used for qualified disaster expenses.
Extends refundable child‑tax‑credit parity and other tax benefits to Puerto Rico, American Samoa, Guam, the Northern Mariana Islands, and the Virgin Islands, and provides payments to those possessions to offset lost benefits.

Legislative Activity

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1 earlier action

SenateIntro Referral Latest Action

Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S6289-6290)

Finance Committee

October 3, 2017

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SenateIntro Referral

Introduced in Senate

October 3, 2017

SenateIntro Referral

Read twice and referred to the Committee on Finance. (Sponsor introductory remarks on measure: CR S6289-6290)

Finance Committee

October 3, 2017

Floor Debate

3 members

What members said about S. 1907 on the floor

3 Democrats

Sen. Bill NelsonD-FL · Oct 3, 2017

Mr. President, I am the Senator from Florida, along with my colleague Marco Rubio. We, of course, have been at the forefront of this terrible tragedy that is going on in Puerto Rico, and I want to…

Mr. President, I am the Senator from Florida, along with my colleague Marco Rubio. We, of course, have been at the forefront of this terrible tragedy that is going on in Puerto Rico, and I want to comment on that.

By the way, speaking of bipartisanship, there is a good example. Senator Rubio and I, when our State was hit by Irma, spent 3 days, going around together, showing that we were shoulder to shoulder trying to help Floridians overcome the tragedy that had just befallen them. We dished out food together. We went and surveyed the floods. We went into the poor, little cities. We went and thanked university students who had rescued the elderly, the frail, when they were abandoned. We went all across the State. The day after the storm, we went first into the Keys to see the destruction there. Senator Rubio and I have been joined at the hip.

When it comes to looking at what is happening in Puerto Rico, it is pretty obvious. Last week, a week had passed since the storm. In fact, the supplies were stacking up, but they were stacking up in the ports. They were not able to get out into the interior of the island. The two of us were pretty strong in our words; that you have to get the most capable organization in to do that when in fact it is almost like combat conditions, and that is the U.S. military.

Finally, Wednesday night of last week, they sent me a three-star general who started to get it organized. Now we are seeing it distributed out, but it is going to take more because it is an island that is just absolutely devastated. It is going to take a long time to recover, and it is going to take a lot more money.

Remember, these are our fellow American citizens. We saw the devastation in Florida. Now the continuing hardship is being tolled in Puerto Rico. It is a population where half are without drinking water, only 5 percent--and this is 2 weeks after the storm--of the electricity grid is restored, and cash is in short supply.

Whereas, in Florida we saw the flooded streets, the downed trees, the crushed cars, the flipped over mobile homes, limited access to critical supplies like gasoline. Property damage was everywhere, and it was the entire State. What we are seeing is--multiply that many fold, and that is what we are seeing in Puerto Rico.

We are working on a supplemental funding bill. Remember that right after the first storm in Texas, we passed a $15 billion emergency supplemental appropriations bill. That is going to run out within the next few days so we have to have another supplemental funding bill.

As you can imagine, now it is not just Texas and Florida, but it is the Virgin Islands, it is Puerto Rico, and there are some other States as well. We are going to need to help the people cover the cost of recovery, and we are going to need to jump-start the local economy in those areas hardest hit by the storms.

Today I am going to introduce a piece of legislation. I call it the National Disaster Tax Relief Act, which would give people affected by these storms some much needed tax relief. This is in the shadow of the conversations taking place, as we speak, in a hearing--which I have just come from--in the Finance Committee about future reform of the Federal Tax Code.

The bill I am introducing today would do four things: One, it would let businesses and farmers immediately write off their cleanup costs, not just their replacement costs.

For example, the Florida citrus growers in the central part of the State--and it was finally going to be a good news story on our citrus crop--half of the citrus buffeted by the wind is on the ground.

Go further south into Southwest Florida, 75 percent of the citrus is on the ground. What this would do is allow the citrus growers to be able to, in the first year, write off the costs--expenses, in other words--of removing the downed trees, not just the cost of a new tree. That is especially important to citrus growers all over the United States because they are already hurting from a plant disease, a bacteria known as greening, which kills the citrus tree in 5 years.

Therefore, there are a number of these groves that have been abandoned, but it is valuable land. We need to give an incentive to the citrus grower to be able to go in and plow under that citrus growth and replant--the immediate expensing of that plowing under, plus the replanting of what we think are hardier varieties of citrus that are more resistant to this disease, this bacteria called greening. We think that would be a huge incentive to try to save the citrus industry not only in my State but in Texas, Arizona, California. There is citrus also in Louisiana and some in other Southern States.

The second thing the bill does is it gives taxpayers the ability to exempt State and local disaster mitigation payments from Federal taxes, and it lets them save for the next big storm tax-free. That would be in a catastrophe savings account.

It would allow people to save tax-free $150,000 to cover things not covered by insurance. In Southwest Florida, there are a lot of seawalls that cave in, seawalls that are extremely expensive to rebuild and repair. This tax-free account would allow them to put away savings for that and other kinds of costs of remediation. They go out, and they try to save their home by getting tarps on the roof, making certain repairs until they can get the replacement, and the insurance can pay for it. Expensing of those items in the Tax Code would certainly be that incentive.

The bill also includes extra infrastructure financing for areas damaged by the storms; for example, help for low-income housing needs and other infrastructure needs that are so important to economic recovery.

The fourth thing the bill does is it includes tax incentives for Puerto Rico and the Virgin Islands and extends tax benefits that are available on the mainland but not in the territories like the full child tax credit.

Why should we treat our American citizens in a territory any differently taxwise on a child tax credit than we treat our citizens on the mainland, the main 50 States? It shouldn't be. It doesn't make sense.

What is happening in Puerto Rico should concern every American. Governor Rossello has warned of a humanitarian crisis if we do not quickly move to alleviate this situation.

The Coast Guard is working with FEMA and others to bring in drinking water and other critical supplies as well. Additional work is being done to restore power. Generators are being shipped in to help manage the load at the airport, and there are 30 flights per day now, which is projected to grow to 60 flights in the coming days. Meanwhile, as the evacuations continue, we don't want to leave Puerto Rico in tatters. We have to rebuild. That is going to be an expensive cost to pay.

As we are going into a supplemental package for all of these storm- affected areas, and since the utilities in Puerto Rico were so out-of- date and so arcane, let's think creatively. In remote villages, let's supply photovoltaic cells to generate electricity as a backup because another storm is going to come and the power lines are going to go down. Let's think creatively as we help these areas rebuild.

We are working on this supplemental package to get additional aid to those suffering, and I am hopeful that what I have suggested here as a tax incentive will be a part of that conversation. Our country is hurting. We should be doing everything we can to help it heal.

Now, not only are we healing from coming out of some ferocious storms, but now we have another grim reminder that, in America, we are not treating each other as we would want to be treated. Something is wrong in the psyche of some, so that whatever the motivation is, there would be mass execution. I hope we will soon have a very serious conversation about the direction of this country.

Sen. Bill NelsonD-FL · Oct 3, 2017

Mr. President, I am the Senator from Florida, along with my colleague Marco Rubio. We, of course, have been at the forefront of this terrible tragedy that is going on in Puerto Rico, and I want to…

The bill I am introducing today would do four things: One, it would let businesses and farmers immediately write off their cleanup costs, not just their replacement costs.

What is happening in Puerto Rico should concern every American. Governor Rossello has warned of a humanitarian crisis if we do not quickly move to alleviate this situation.

Sen. Jack ReedD-RI · Oct 3, 2017

Mr. President, today, I am introducing the Corporate Management Accountability Act, which request each publicly traded company to disclose its policies on whether senior executives or shareholders…

Mr. President, today, I am introducing the Corporate Management Accountability Act, which request each publicly traded company to disclose its policies on whether senior executives or shareholders bear the costs of paying the company's fines and penalties.

In 2014, the President of the Federal Reserve Bank of New York, William Dudley, gave a speech on Enhancing Financial Stability by Improving Culture in the Financial Services Industry. In this speech, President Dudley said, ``in recent years, there have been ongoing occurrences of serious professional misbehavior, ethical lapses and compliance failures at financial institutions. This has resulted in a long list of large fines and penalties, and, to a lesser degree than I would have desired employee dismissals and punishment. . . . The pattern of bad behavior did not end with the financial crisis, but continued despite the considerable public sector intervention that was necessary to stabilize the financial system. As a consequence, the financial industry has largely lost the public trust.''

Since 2008, ``banks globally have paid $321 billion in fines . . . for an abundance of regulatory failings from money laundering to market manipulation and terrorist financing, according to data from Boston Consulting Group.'' Unfortunately, despite these fines, we continue to see disappointing behavior at our financial institutions, whether it is Wells Fargo betraying the trust of its customers by opening unauthorized accounts or it is Equifax endangering millions of consumers by compromising critical personal information. Indeed, in my home State of Rhode Island, nearly half the State may have been affected by the cybersecurity breach at Equifax. Given these and other breaches and lapses, it is clear that many financial institutions have a long way to go in rebuilding the trust of Rhode Islanders and the American people.

At the same time, it is also clear that more must be done than simply fining and penalizing financial institutions at the corporate level. Senior executives, many of whom are all too eager to take credit for a company's good news, must also take more responsibility for the bad news, especially if it is true that the buck stops with them. For example, the Financial Crisis Inquiry Commission concluded ``the financial crisis reached cataclysmic proportions with the collapse of Lehman Brothers,'' and yet, according to the Congressional Research Service, not a single senior executive officer at Lehman Brothers at the Federal level was charged, went to jail, or personally paid a Federal fine or penalty for the damage caused at Lehman Brothers that rippled through our economy in 2008.

According to Professor Peter J. Henning, who also writes for the New York Times in its White Collar Watch column, ``a problem in holding individuals accountable for misconduct in an organization is the disconnect between the actual decisions and those charged with overseeing the company, so that executives and corporate boards usually plead ignorance about an issue until it is too late.''

The Corporate Management Accountability Act I am introducing today is one attempt at helping to solve this problem. The bill asks publicly traded companies to disclose whether they expect senior executives or shareholders to pay the cost of corporate fines or penalties. This approach is supported by University of Minnesota Law School Professors Claire Hill and Richard Painter, who also served as President George W. Bush's chief ethics lawyer, as well as U.S. PIRG, Public Citizen, and Americans for Financial Reform.

Companies must do a better job of aligning executive incentives so that they are motivated to put their shareholders, and not themselves, first. I urge all my colleagues to join this legislative effort to hold senior executives accountable for their actions.

Sen. Bill NelsonD-FL · Oct 3, 2017

Mr. President, the aftermath of Las Vegas is a time for this Senator to reflect on whether a shooting is like Mateen's, in the Orlando nightclub, where he was motivated as a terrorist, and then there…

Sen. Christopher A. CoonsD-DE · Oct 3, 2017

Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Bill Text

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Introduced in SenateIssued October 3, 2017

115th CONGRESS

1st Session

S. 1907

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.

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.

Tax relief relating to disasters

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:

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.

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.

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.

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.

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.

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.

Permanent disaster tax relief provisions

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.

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:

Catastrophe Savings Accounts

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.

III

Other permanent tax provisions

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.

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.

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.

Treatment of certain possessions

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.