Committee on Ways and Means

For Immediate Release
Contact: Press Office 202-225-8933
December 13, 2001

NEW YORK CITY, SEPTEMBER 11 FAMILIES
GET TAX RELIEF

Victims of the September 11^th terrorist attacks and their families will receive broad tax relief under a bill passed unanimously this afternoon by the House of Representatives. The bill offers New York City substantial tax incentives that will help restore lower Manhattan to its world famous vitality.

“New York City took it on the chin on September 11^th,” said Ways and Means Chairman Bill Thomas [R-California]. “I visited the awesome devastation at Ground Zero not long after the attacks. I have spoken with grieving families whose wounds are still raw.”

“I have also listened to the concerns of the city’s business community and government. The victims of this catastrophe are not just the thousands who tragically lost their lives as the towers crumbled,” Thomas continued. “They’re also the thousands of owners and workers at small and medium sized businesses within the disaster zone whose ability to support their families has sustained a massive blow.” 

“All these concerns are addressed in this legislation today”.

The bill extends the current favorable tax treatment received by victims of overseas terrorist acts to victims of domestic acts of terrorism. It offers a number of provisions that will help businesses reconstruct, recover and create new jobs for the region’s displaced workers.

A summary of the bill is attached.

SUMMARY OF VICTIMS’ TAX RELIEF

• Income Tax Relief.  Waives income tax liability for the year of death and the year prior to death.  Applies to victims of the September 11, Oklahoma City bombing and anthrax attacks.
• Death Benefits.  Provides tax-free treatment of death benefits paid by an employer to an employee who died as a result of the September 11, Oklahoma City bombing or anthrax attacks.
• Estate Tax Relief.  Provides estate tax relief for the victims of the September 11, Oklahoma City bombing and anthrax attacks.
• Charitable Organizations and Private Foundations.  Allows charitable organizations to make pro rata payments to the families of victims who died as a result of the September 11 and anthrax attacks.  The bill also allows employers to set up private foundations for the purpose of providing benefits to employees’ families.
• Disaster Relief Payments.  Clarifies current law by codifying the tax-free treatment of disaster relief payments made in connection with terrorist and military actions, Presidentially-declared disasters and certain other disasters.
• Victims Compensation Fund.  Provides tax-free treatment for any award made from the Victims Compensation Fund.  (Note:  tax reductions, such as those provided by this bill, would not reduce awards from the Victims Compensation Fund.)
• Authority to Postpone Deadlines.  Expands IRS and DOL authority to postpone tax-related and pension-related deadlines for taxpayers affected by terrorist and military actions and Presidentially-declared disasters.
• Structured Settlements.  Creates a 40 percent excise tax on transactions in which structured settlement payments are sold for a lump sum unless the transaction is approved by a court as being in the victim’s best interest.
• Disability Trusts.  Reduces the taxation of disability trusts by providing a higher exemption.
• IRS Disclosure Rules.  Allows the IRS to share tax return and taxpayer information with Federal law enforcement agencies investigating terrorist attacks.

SUMMARY OF NEW YORK LIBERTY ZONE PROVISIONS

• Tax-Exempt Liberty Bonds.  Authorizes the issuance of $15 billion of tax-exempt Liberty Bonds to help rebuild and rehabilitate commercial, residential rental, and public utility property in the Liberty Zone.  Up to $7 billion of the proceeds could be used to finance commercial property anywhere in New York City.
• Bonus Depreciation Deduction.  Allows businesses an additional first-year depreciation deduction equal to 30 percent of the adjusted basis of property used in the Liberty Zone.  Bonus depreciation would apply to purchased computer software and almost all tangible personal property, including buildings.
• 5-Year Recovery Period for Leasehold Improvements.  Reduces the recovery period for leasehold improvements made to commercial buildings located in the Liberty Zone from 39 years to 5 years.
• Increase Small Business Expensing.  Allows small businesses to deduct an additional $35,000 under section 179 for qualifying property used in the Liberty Zone.  Thus, small business would be allowed to deduct $59,000 (instead of $24,000) for qualifying property.
• Increase Time Period for Reinvesting Gains.  Allows taxpayers to defer taxes on gains from insurance proceeds as long as the gains are reinvested in New York City within 5 years.  Current law provides a 2-year time period in most cases.

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