HURRICANE TAX RELIEF PROVISIONS HAVE NATIONWIDE IMPLICATIONS

Following massive storm damage to the Gulf Coast, the Katrina Emergency Tax Relief Act of 2005 (KETRA) was enacted on Sep 23, 3005. While many provisions apply to only affected areas in four states (Alabama, Louisiana, Mississippi, and Florida), tax advisors need to recognize that other provisions h...

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Bibliographic Details
Published in:Practical Tax Strategies 2006-02, Vol.76 (2), p.96
Main Authors: Harmelink, Philip J, Vandenburgh, William M
Format: Article
Language:English
Subjects:
Advisors
Donations
Gift taxes
Housing
Hurricanes
Retirement plans
Storm damage
Tax courts
Tax deductions
Tax exemptions
Tax legislation
Tax planning
Tax returns
Taxpayers
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Summary:Following massive storm damage to the Gulf Coast, the Katrina Emergency Tax Relief Act of 2005 (KETRA) was enacted on Sep 23, 3005. While many provisions apply to only affected areas in four states (Alabama, Louisiana, Mississippi, and Florida), tax advisors need to recognize that other provisions have significant nationwide implications. This article addresses the initial tax implications and tax planning opportunities inherent in the surprisingly wide-ranging and far-reaching KETRA. KETRA delegates to the IRS a broad range of administrative authority to implement changes to facilitate Hurricane Katrina tax relief. Section 403 titled, "Required Exercise of IRS Administrative Authority," extends administrative relief until at least Feb 28, 2006. Taxpayers who house individuals displaced by Hurricane Katrina are entitled to an additional dependency exemption of $500. KETRA incorporates highly favorable retirement plan changes for eligible taxpayers. KETRA also contains provisions that are targeted to employers.
ISSN:1523-6250