Washington, D.C. (November 18, 2014) – Troy K. Lewis, CPA, CGMA, chair of the Tax Executive Committee of the American Institute of CPAs (AICPA), told a Senate panel today that Congress should pass legislation that would give victims of natural disasters access to permanent and timely tax relief.

“Our current system provides inconsistent tax relief,” Lewis testified at a hearing of the Senate Finance Subcommittee on Taxation and IRS Oversight.  “In the past, Congress has considered each disaster as an isolated event and restricted any special tax relief to the individual event.”

As a result, he said, similarly-situated taxpayers receive different tax benefits for comparable losses. “It is important that all victims – regardless of the state in which they reside or the type of disaster they endure – receive comparable relief.”

The tax relief should be triggered when a federal disaster declaration is issued, Lewis said.  “By having a trigger mechanism in place, Congress allows the IRS to promptly issue notice of the available relief to the public and enables the IRS to program its systems appropriately.”

“Under the current system,” he said, “individuals and small business owners do not know what tax relief they will receive until Congress enacts legislation sometimes months or even years after the event.  The uncertainty surrounding such delayed relief impedes recovery.”

Lewis outlined 10 specific permanent recommendations that the AICPA believes should be activated when a taxpayer resides in, or has a principal place of business located in, a Federal Emergency Management Agency disaster declaration area for which individual disaster assistance is available.

Among the recommendations are:

Waive individual casualty loss minimums;
Waive the penalty for early retirement withdrawal;
Exclude non-business discharge of indebtedness from taxable income;
Extend the net operating loss carryback to five years, and
Increase the property replacement period to five years.
In addition, Lewis said, “A set of standard disaster tax relief provisions will minimize the administrative burdens on the victims as well as the IRS.”

About the AICPA

The American Institute of CPAs (AICPA) is the world’s largest member association representing the accounting profession, with more than 400,000 members in 145 countries, and a history of serving the public interest since 1887. AICPA members represent many areas of practice, including business and industry, public practice, government, education and consulting.

The AICPA sets ethical standards for the profession and U.S. auditing standards for private companies, nonprofit organizations, federal, state and local governments. It develops and grades the Uniform CPA Examination, and offers specialty credentials for CPAs who concentrate on personal financial planning; forensic accounting; business valuation; and information management and technology assurance. Through a joint venture with the Chartered Institute of Management Accountants (CIMA), it has established the Chartered Global Management Accountant (CGMA) designation which sets a new standard for global recognition of management accounting.

The AICPA maintains offices in New York, Washington, DC, Durham, NC, and Ewing, NJ.

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