Gulf Opportunity Zone Act of 2005

GULF OPPORTUNITY ZONE ACT OF 2005

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Mr. GRASSLEY. Mr. President, this amendment 2680 acts on our commitment to provide rebuilding assistance to areas of the country devastated by this year's relentless hurricane season. It will benefit residents of the gulf region, as well as more recently impacted areas of Texas and Florida, and provides much needed relief and resources for economic rebuilding to those areas.

As promised, we have made our best effort to marry up our compassion for displaced persons and damaged communities with attention to fiscal discipline and the best use of taxpayer dollars. This bill represents an effort to most efficiently and effectively use the tax code to assist in the rebuilding and revitalization of those regions. I will reiterate the guiding principles of our hurricane relief legislation. First, because market forces will be the driver in getting these regions back on their feet, our bill includes only provisions that encourage and incentivize redevelopment. Second, our package provides resources only to those who incurred uninsured losses and does not provide for a bailout of those who assumed risk as an insurer in our capitalist, free-market system. Third, we have focused our limited Federal resources on those most in need--like the many devastated small business employers who were the backbones of these economies and who will be the engines of their future growth and prosperity. The amendment provides front-loaded incentives on a timely basis to encourage people and businesses to return to the region as quickly as possible.

I want to show my appreciation to my colleagues in the Senate and in the House for working to get this legislation to the President as quickly as possible. Before we go home to spend time with our families, it is important for us to help the many families who have had their lives overturned by the recent hurricanes. Hopefully they will think of this holiday season as a time of rebuilding and opportunity.

The amendment also includes tax technical correction provisions related to the American Jobs Creation Act of 2004 and other tax legislation. Technical corrections measures are routine for major tax acts and are necessary to ensure that the provisions of the acts are working consistently with their original intent, or to provide clerical corrections. Because these measures carry out congressional intent, no revenue gain or loss is scored from them.

The process and test for technical corrections ensures that only provisions narrowly drawn to carry out Congressional intent are included. Technical corrections are derived from a deliberative and consultative process among the congressional and administration tax staffs. That means the Republican and Democratic staffs of the House Ways and Means and Senate Finance Committees are involved as is the Treasury department staff. All of this work is performed with the participation and guidance of the nonpartisan Joint Committee on Taxation staff. A technical enters the list only if all staffs agree it is appropriate.

The Senate Finance Committee and the Committee on Ways and Means, in consultation with the Joint Committee on Taxation and the Department of the Treasury, are continuing to assess proposals for other technical corrections which may be needed to achieve congressional intent. On that point, no double benefit is intended under the railroad track maintenance credit of code section 45G. If the current basis adjustment rule is not serving to carry out that intent, the provision may need to be clarified. Such a clarification might provide that basis or tax attribute reduction applies to the taxpayer taking the credit. I would like to ask the staff to work on this.

In conclusion, this package will show those affected by Hurricanes Rita, Wilma, and Katrina that their needs have not been forgotten, and that we will continue to help them rebuild their homes, communities, and lives.

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Mr. GRASSLEY. I share concern with the impact that Katrina will have on the ability of low wage working families who qualify for the child tax credit and the earned income tax credit to receive them for the 2005 tax year. In addition, I certainly agree that something must be done to address this problem for families who generously gave of themselves and took in a child displaced by Katrina but may lack the proper formal authorization that would prevent them from receiving the EITC they qualify for and would otherwise get.

To help address this problem, I would urge the IRS to accept a child placement decision by an authorized agency as being retroactive to the earliest point in 2006 when the taxpayer first took in the child. This would apply only to children who had resided in a hurricane disaster zone in 2005 as defined under HKTRA and under any subsequent legislation extending HKTRA provisions to Rita and Wilma survivors.

I have been advised that the IRS has the ability to adopt this approach under section 407 of HKTRA and any equivalent extension to Rita and Wilma survivors--that enables the Secretary to make adjustments in application of rules to ensure that hurricane survivors do not lose tax benefits. I know my colleague from Montana joins me in urging the IRS to use this authority to help these foster care families who so generously took in children displaced by Katrina.

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Mr. GRASSLEY. I agree that many eligible hard-working families who qualify for the EITC and the child tax credit but whose lives have been sharply affected by the hurricane may face particular challenges and hurdles in applying for and receiving these credits. I also concur that is incumbent upon the IRS to take all steps it can to ensure that the public and the tax preparation community have clear, detailed, and understandable information about any adjustments and modifications it makes to help Katrina victims who qualify for the credits get them.

I believe that the IRS should report to Congress within the next couple of weeks the action it has taken to implement the provisions of section 406 and section 407 HKTRA, pertaining to the EITC and CTC, including outreach and communication efforts undertaken by IRS to inform taxpayers, tax practitioners, and volunteer tax preparation programs of these provisions, including the guidance provided to them by IRS on how the flexible authority to IRS in section 407 is being interpreted and implemented. IRS should publish such guidance, including typical questions and answers, in formats that are accessible to taxpayers, commercial tax practitioners, volunteer tax preparer organizations and low-income taxpayer clinics, including but not limited to the IRS Web site.

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