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Amending Internal Revenue Code of 1986 Providing For Proper Tax Treatment of Certain disaster Mitigation Payments

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Location: Washington, DC


AMENDING INTERNAL REVENUE CODE OF 1986 PROVIDING FOR PROPER TAX TREATMENT OF CERTAIN DISASTER MITIGATION PAYMENTS -- (House of Representatives - March 14, 2005)

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Mr. JINDAL. Mr. Speaker, I want to applaud the gentleman from Florida (Mr. Foley), and I want to thank the gentleman from California (Mr. Thomas) for allowing us to debate this very important bill. I would certainly urge support from all my colleagues to correct an injustice. Certainly there are many families impacted in Louisiana by this new tax ruling from the IRS.

I want to focus on two families in particular. To avoid repeating much of what has already been said, I want to focus on two families in particular that will be helped by the passage of H.R. 1134. First, I would turn your attention to the Guidry family. They live in Slidell, Louisiana. They are constituents of mine. They received $125,000 to mitigate flood damage and to protect them against future loss. A good thing, you might say, after their home was damaged in Hurricanes Isadore and Lili. Indeed, it was a good thing that our government stepped in to help them recover not only from this natural disaster but also to prevent future flood damage and to protect this family from future damage and also to protect the Federal Treasury. However, with this new ruling, this novel ruling from last year, this new ruling that their income tax would now have to increase, not only were they raised and put into a higher tax bracket but their son who is paraplegic and who attends college on a need-based Pell grant is now being faced with the prospect of losing his financial aid and having to drop out of school if we do not pass this bill. This same family, the Guidry family, is also facing the prospect of having to sell the home in order to pay the taxes for the grant they received to fix the home that they owned in the first place. Certainly this is not what this body intended when we provided assistance and recovery dollars to those that are impacted by natural disasters.

A second example. Mike Perkins, also from Slidell, received a grant back in 2001 to raise his home again to prevent future floods and also to save our Treasury from future damage claims. He finished construction 3 years ago, thought this was a closed issue, has been living in this home for over 3 years since he repaired his home, raised the home, until he got a letter from his local government in January saying that now, after the fact, he would have to pay higher taxes.

I am very pleased not only for the support from the gentleman from Florida (Mr. Foley) and from the gentleman from California (Mr. Thomas) but also from the Treasury Department. I am also anticipating a letter from the IRS indicating that they do not intend to go back in time and retroactively apply these higher taxes, these surprise taxes to people who received grants in previous years, adding insult to injury to those who are recovering from natural disasters.

I urge my colleagues to support this bill.

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