Cantwell, Pryor Introduce Amendment to Provide Tax Relief for Disaster Victims

Measure would cut red tape to provide tax relief for survivors of Oso mudslide, Arkansas tornadoes

WASHINGTON, D.C. – Homeowners whose property was destroyed or damaged by major disasters in 2014 would qualify for greater tax relief under an amendment introduced Thursday by U.S. Senators Maria Cantwell (D-WA) and Mark Pryor (D-AR).

Cantwell and Pryor’s proposed amendment would allow survivors of 2014 federally declared disasters in Washington state, Arkansas, and elsewhere to receive some of the same tax benefits that Congress has granted in previous years after major disasters such as Hurricane Katrina.

Under current law, victims of disasters must prove that their uncompensated loss exceeds 10 percent of their adjustable gross income, in order to claim a tax deduction. For example, a family with $70,000 income would generally need to have at least $7,000 in damages to get a deduction. Cantwell and Pryor’s measure would remove the minimum threshold, enabling survivors to deduct more of their losses. 

“This amendment will help homeowners who have suffered losses get back on their feet and rebuild their communities,” Cantwell said. “Senator Pryor and I want to ensure survivors of recent disasters get broad tax relief from the IRS. Congress has taken similar action before in response to major disasters, and this amendment will ensure the tax code doesn’t leave out those who were affected in 2014.”

“When natural disasters strike, we need to do everything we can to help our neighbors in need rebuild and recover,” Pryor said. “I’ve been proud to work with local, state, and federal officials to secure disaster relief funding for Arkansas communities that were hit by last month’s tornadoes. This amendment will give these disaster survivors the extra assistance they need to get back on their feet.”

Cantwell and Pryor’s measure would allow taxpayers to claim uncompensated disaster losses even if they don’t itemize their deductions, which current law doesn’t permit. Only about 33 percent of Americans itemize their tax returns, meaning current law leaves a greater likelihood of missing those who have incurred major losses.  Current law does not extend those benefits to individuals affected in 2014.

It would apply to individuals in areas declared as federal disaster areas in 2014.

On March 22, a mudslide killed at least 41 people and destroyed dozens of homes near the community of Oso in Cantwell’s home state of Washington. On April 2, President Obama declared a major disaster, opening federal help to state and local authorities and assistance such as low-interest loans to homeowners and businesses. On April 27, tornadoes in Pryor’s home state of Arkansas killed 16 people and destroyed hundreds of homes.

The President declared a major disaster in Arkansas on April 29.

In 2014, federal disaster declarations also have been issued in states such as Alabama, Florida, Georgia, Indiana, Maryland, Mississippi, Montana, North Carolina, Oregon, and South Carolina.

Cantwell and Pryor’s amendment, if approved, would add disaster provisions to the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act. That bill, which currently is before the Senate, would renew a package of tax incentives that lapsed at the end of 2013.