Snow Praises Quick Action On Katrina Tax Bill

by Mike Godfrey, Tax-News.com, Washington

23 September 2005

Speaking earlier this week, US Treasury Secretary, John Snow announced that:

"I commend Senate and House negotiators for reaching bipartisan agreement on the Hurricane Katrina emergency tax relief bill. I am pleased that the House acted to pass the bill this afternoon and look forward to quick Senate action. This aid comes at exactly the right time to help victims of Hurricane Katrina as they rebuild their lives. Hurricane Katrina was a devastating blow to our Gulf Coast and this aid package will be an important part of the recovery effort."

He went on to add that:

"We also look forward to working with the Congress in the coming weeks to enact the President's proposals for Gulf Opportunity Zones, Worker Recovery Accounts and the Urban Homesteading initiative to help revitalize areas affected by Hurricane Katrina. Finally, it is important that Congress acts to ensure the future health of our national economy by making the President's tax cuts permanent. A strong national economy is crucial to rebuilding the Gulf economy."

It emerged this week that both the House and the Senate have passed tax cutting bills designed to assist Hurricane Katrina victims.

Among the measures contained in the upper house's bill, put together by Senate Finance Committee chairman, Senator Charles Grassley and ranking Democrat on the Committee, Senator Max Baucus, were:

• An exemption for indebtedness discharged by commercial lenders when the forgiveness is in response to damage suffered from Hurricane Katrina;
• A waiver of the 10% penalty tax for premature distributions from IRAs and qualified retirement plans (including defined benefit plans, 401(k) plans and 403(b) plans) for individuals whose principal residence is in a federally declared natural disaster area;
• Extension of the Work Opportunity Tax Credit to Katrina victims; and A 40% tax credit for wages paid up to $6,000 if paid after August 28, 2005, and before December 31, 2005, by employers located in the disaster zone in order to assist with employee retention.

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