Protect Innocent Victims of Taxation After Fire Extension Act
Summary
The "Protect Innocent Victims of Taxation After Fire Extension Act" (H.R. 5225) amends the Internal Revenue Code of 1986 to exclude qualified wildfire relief payments from gross income. This exclusion applies to compensation received by individuals for losses, expenses, or damages resulting from federally declared wildfire disasters after December 31, 2014. The exclusion is set to terminate after December 31, 2032.
Expected Effects
The bill aims to provide tax relief to individuals who have suffered losses due to wildfires. By excluding wildfire relief payments from gross income, it reduces the tax burden on those recovering from these disasters. This could free up resources for recovery and rebuilding efforts.
Potential Benefits
- Provides financial relief to wildfire victims by exempting relief payments from taxation.
- Allows individuals to recover from losses without the added burden of taxes on compensation.
- Specifically targets federally declared wildfire disasters, ensuring aid reaches affected areas.
- The Act could stimulate local economies in disaster-stricken areas by allowing residents to reinvest relief funds.
- Offers clarity and consistency in the tax treatment of wildfire relief payments.
Potential Disadvantages
- The termination date in 2032 could create uncertainty for future wildfire victims.
- The exclusion might disproportionately benefit those who receive larger relief payments.
- Potential for complexity in determining what qualifies as a 'qualified wildfire relief payment'.
- The bill does not address the root causes of wildfires or promote preventative measures.
- The bill could incentivize development in fire-prone areas.
Constitutional Alignment
The bill aligns with the General Welfare Clause of the Constitution, as it seeks to provide relief to citizens affected by wildfires, promoting their well-being. Congress has the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States (Article I, Section 8, Clause 1). The bill falls under Congress's power to make laws necessary and proper for carrying into execution the powers vested by the Constitution (Article I, Section 8, Clause 18).
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).