U.S. Rep. Dennis Ross (FL-15) introduced H.R. 3298, the Disaster Savings Accounts Act of 2013. This bill will allow individuals to set aside up to $5,000 annually in a tax-free account to use for disaster mitigation expenses.
"Natural disasters affect Floridians and Americans all across the country. While we don't know very far in advance where or when exactly a disaster will strike, we can plan ahead for its arrival. Whether it's a tornado, blizzard, earthquake, wildfire, or hurricane, people should have the ability to set aside some of their money each year for disaster mitigation to purchase items that increase the safety of their home, like cement-fortified walls, storm shutters, or generators. This legislation will incentivize people to plan ahead for their safety and reduce the need for taxpayer-funded government intervention in the event of a natural disaster."
The Disaster Savings Accounts Act of 2013 creates a new section (Section 224) within the Internal Revenue Code of 1986 detailing Disaster Savings Accounts and the permitted use of tax-deferred dollars.
SEC. 224 (New section of Internal Revenue Code) -- Disaster Savings Accounts:
Permits eligible individuals to set aside up to $5,000 annually in a tax-deferred account to use for disaster mitigation expenses.
Allows the DSA to be established under the management of a "Trustee", which can be a bank, insurance company, or other entity that can demonstrate proper management and distribution of funds as detailed by this act.
An eligible individual is one who owns property, upon which a structure sits that is also insured by a policy traditionally required by the mortgage-holding lender.
Examples of hazards include earthquakes, floods, hail, hurricanes, lightening, power outages, tornadoes, wildfires and any other natural disasters.
Remaining DSA funds may roll over into the following year.
Includes a 20 percent penalty tax on funds withdrawn from a DSA and used for purposes other than disaster mitigation expenses.