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The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Sep 23, 2005.
Katrina Emergency Tax Relief Act of 2005 - (Sec. 2) Defines: (1) "Hurricane Katrina disaster area" as an area declared as a major disaster area by the President before September 14, 2005, by reason of Hurricane Katrina; and (2) "core disaster area" as that portion of the Hurricane Katrina disaster area determined by the President to warrant individual or individual and public assistance.
Title I: Special Rules For Use Of Retirement Funds For Relief Relating To Hurricane Katrina - (Sec. 101) Exempts from the 10% penalty for premature retirement plan distributions any qualified Hurricane Katrina distribution, up to $100,000, made on or after August 25, 2005, and before January 1, 2007, to an individual whose principal place of abode on August 28, 2005, was located in the Hurricane Katrina disaster area and who has sustained an economic loss due to Hurricane Katrina. Allows repayment of a qualified Hurricane Katrina distribution to a tax-qualified retirement plan as a rollover if made within three years after an initial distribution. Allows qualified Hurricane Katrina distributions to be spread in income ratably over a three-year period.
(Sec. 102) Allows individuals to make rollover contributions to tax-qualified retirement plans of distributions from such plans received after February 28 and before August 29, 2005, to purchase or construct a principal residence in a Hurricane Katrina disaster area if the residence was not purchased or constructed due to Hurricane Katrina.
(Sec. 103) Increases from $50,000 to $100,000 the limits on loans from tax-qualified retirement plans for Hurricane Katrina victims. Extends the repayment period for such loans.
(Sec. 104) Sets forth rules for the retroactive application of amendments made by this title or by regulation to existing retirement plans or annuity contracts.
Title II: Employment Relief - (Sec. 201) Includes a Hurricane Katrina employee as a member of a targeted group for purposes of the work opportunity tax credit. Defines "Hurricane Katrina employee" as any individual who is reasonably identified as having a principal residence in a core disaster area on August 28, 2005, and who is hired in such area prior to December 31, 2005. Waives the termination date of the work opportunity tax credit for Hurricane Katrina employees.
(Sec. 202) Allows employers in a core disaster area a business tax credit for 40 percent of the first $6,000 of wages paid to core disaster area employees after August 28, 2005, and before January 1, 2006.
Title III: Charitable Giving Incentives - (Sec. 301) Suspends limitations on individual and corporate tax deductions for cash contributions to charitable organizations made between August 28 and December 31, 2005.
(Sec. 302) Allows individuals, in taxable years beginning in 2005 or 2006, to claim an additional tax exemption of $500 to $2,000 for providing free housing for a period of 60 consecutive days to an individual displaced by Hurricane Katrina.
(Sec. 303) Increases (to 70 percent of the standard mileage rate for business usage) the mileage rate for the tax deduction for charitable use of an automobile for Hurricane Katrina disaster relief between August 25, 2005, and December 31, 2006.
(Sec. 304) Excludes from gross income reimbursements to volunteers for automobile expenses for providing Hurricane Katrina disaster relief between August 25, 2005, and December 31, 2006.
(Sec. 305) Extends to individual taxpayers (currently, restricted to C corporations) the tax deduction for charitable contributions of food inventory made between August 28 and December 31, 2005.
(Sec. 306) Allows an increased tax deduction for charitable contributions of book inventories made to public schools between August 28 and December 31, 2005.
Title IV: Additional Tax Relief Provisions - (Sec. 401) Excludes from gross income certain nonbusiness discharges of indebtedness of individuals residing in the core disaster area or the Hurricane Katrina disaster area, made on or after August 25, 2005, and before January 1, 2007.
(Sec. 402) Suspends limitations on the tax deduction for personal casualty losses attributable to Hurricane Katrina.
(Sec. 403) Extends deadlines for the filing of certain tax returns (including excise and employment tax returns) and for the payment of such taxes until February 28, 2006, for taxpayers in the Hurricane Katrina disaster area.
(Sec. 404) Suspends certain requirements for home loans financed by mortgage revenue bonds for residences in the Hurricane Katrina disaster area and core disaster area that were rendered uninhabitable. Increases the limit on such loans to $150,000.
(Sec. 405) Extends from two to five years the mandatory replacement period for property which is compulsorily or involuntarily converted on or after August 25, 2005, due to Hurricane Katrina, for purposes of allowing nonrecognition of gain from the conversion of such property.
(Sec. 406) Allows taxpayers displaced by Hurricane Katrina to use earned income for the previous taxable year to compute the earned income and child tax credits for the tax year which includes August 25, 2005.
(Sec. 407) Authorizes the Secretary of the Treasury, for taxable years beginning in 2005 or 2006, to apply the tax laws to ensure that taxpayers do not lose any tax deduction or credit or experience a change of filing status by reason of temporary relocations due to Hurricane Katrina.
Title V: Emergency Requirement - (Sec. 501) Declares that any provision of this Act causing an effect on receipts, budget authority, or outlays is designated as an emergency requirement (pursuant to section 402 of H. Con. Res. 95 [109th Congress]).
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