House Passes Tax Bills Targeting Casualty Deductions and Deadline Relief

The House passed four tax administration bills with overwhelming bipartisan support on September 15, but the outlook for their enactment depends on the House and Senate resolving differences in their legislative approaches.

The bills address relatively narrow issues:

• Protecting Taxpayers From Ghost Preparers Act (H.R. 9499): Expands the definition of a return for purposes of Section 6696 preparer penalties to include administrative adjustment requests. 
• Tax Relief for Fraud Victims Act (H.R. 9500): Expands the ability of taxpayers to claim casualty deductions for losses involving fraud, deceit, or misrepresentation.
• End Tax Penalties on American Hostages Act (H.R. 9496): Postpones tax deadlines for taxpayers held hostage or unlawfully detained abroad.
• Taxpayer Advocate Participation Act (H.R. 9498): Allows the National Taxpayer Advocate to file amicus briefs on specific types of issues in tax cases.

Three of the bills passed with voice votes, while H.R. 9500 passed on a 408-17 roll call vote.

The legislation represents the latest in a string of bipartisan tax administration bills that have passed the House. Thirteen others already await Senate action (see our related Alert: House Passes 8 Tax Administration Bills). The broad bipartisan support gives the bills a chance in the Senate, but Senate taxwriters are pushing an alternative approach. 

The Senate Finance Committee has passed a sweeping bipartisan IRS reform bill that shares provisions with some of the House bills. The lead taxwriters would prefer to pass the comprehensive bill rather than use a piecemeal approach to pass individual bills in the Senate using unanimous consent.

The president also recently signed the Doug LaMalfa Federal Disaster Tax Relief Certainty Act (H.R. 5366). That bill codifies individuals’ ability to deduct up to $500 in personal casualty losses from a qualified disaster without regard to the 10% floor on adjusted gross income and excludes qualifying wildfire relief payments from income.