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This page contains a single entry by Westley Annis published on July 28, 2008 11:29 PM.

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Road Home Tax Fix

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Senate Sends to President Housing Bill with Landrieu Road Home Tax Fix Bill includes $1.3 billion in tax relief for the Gulf Coast.

WASHINGTON - The United States Senate today sent to the President's desk a housing bill that includes a provision authored by Sen. Mary L. Landrieu, D-La., to provide $1.3 billion in tax relief to Gulf Coast homeowners and businesses recovering from the 2005 hurricanes. The Senate voted 72-to-13 to send the bill to President Bush, who said earlier this week he will not veto the bill. Sen. David Vitter, R-La., was one of only 13 senators to vote against the bill.

"The Senate today sent to the President a bill with one of the most significant provisions to jump starting our recovery since Katrina and Rita devastated the Gulf Coast in 2005," Sen. Landrieu said. "The IRS ruled it could tax Road Home grants for homeowners in Louisiana and Mississippi. After 18 months of work since I first introduced a 'Road Home Tax' fix bill, Congress is now eliminating that onerous and unintended tax. Our homeowners will now get the tax relief they need to reinvest in their homes and our communities."

The "Road Home Tax" relief would apply to homeowners who took a casualty loss deduction on their 2005 federal tax returns to account for damage to their homes following Hurricanes Katrina and Rita. These homeowners were subsequently required by the Internal Revenue Service (IRS) to pay income tax on their rebuilding grants.

Sen. Landrieu and Rep. Charlie Melancon, D-La., yesterday sent a letter to the IRS, urging the agency to expedite guidance in response to the bill so that homeowners can amend their tax returns as soon as possible.

"It is incredibly important that the residents of the Gulf Coast take advantage of this relief as quickly as possible," the members wrote to IRS Commissioner Douglas Shulman. "We therefore request that the IRS expedite the publication of any guidance or notices to ensure that the IRS' Washington, D.C., office and the IRS' field offices are providing consistent advice.

"By expediting any guidance, we can ensure that the people of the Gulf Coast have the financial certainty that they need to grapple with this tax."

The housing bill also includes a Sen. Landrieu provision benefitting Gulf Coast businesses. It removes the deadline under which they are required to begin construction of new ventures in hurricane-affected areas in order to benefit from Gulf Opportunity Zone (GO Zone) bonus depreciation tax benefits. Currently, only projects that began before December 31, 2007 are eligible for the tax relief. Under the Landrieu plan, no commencement deadline would exist.

"This provision promotes business investment along the Gulf Coast by allowing businesses to begin new construction on commercial properties and rental housing and still take advantage of the bonus depreciation tax break," Sen. Landrieu said.

The housing package is intended to help relieve the housing crisis and broadens the Federal Housing Administration's programs to back refinanced loans. The bill also includes about $95 million in Community Development Block Grant funding for Louisiana.

A full copy of Sen. Landrieu's letter to the IRS is available here:
http://landrieu.senate.gov/news/08.07.25_Letter_to_IRS.pdf

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