Amending Internal Revenue Code of 1986 Providing for Proper Tax Treatment of Certain Diaster Mitigation Payments

AMENDING INTERNAL REVENUE CODE OF 1986 PROVIDING FOR PROPER TAX TREATMENT OF CERTAIN DISASTER MITIGATION PAYMENTS -- (House of Representatives - March 14, 2005)

BREAK IN TRANSCRIPT

Mr. COLE of Oklahoma. Mr. Speaker, I rise today in support of H.R. 1134. This important legislation prevents the IRS from taxing disaster mitigation grants provided by FEMA.

This legislation is necessary and urgent due to the IRS's recent decision that Federal grant money used to build tornado shelters is taxable. Oklahomans who received the grants were not given any prior notice that money received would be taxable. Nor did Congress ever express the intent that such grants were to be taxable. The IRS simply conjured up this decision out of thin air.

It makes no sense for the government to tax Federal money given to mitigate disasters. Disaster relief saves lives, limits damages and makes sense. Taxing the very grants that make this possible is not wise, and it is especially unfair given that this IRS decision will cost the taxpayers of Oklahoma $29 million over 5 years. These FEMA grants were given to thousands of Oklahomans with the average grant in the amount of $2,000. And, as I said earlier, the recipients were never advised that these grants would be taxable.

No revenue has ever been collected from taxing FEMA grants. The IRS's decision is without precedent and reflects poorly on the career bureaucrats who devised this action. H.R. 1134 reverses this senseless bureaucratic decision and prohibits these grants from being taxed.

I want to thank the gentleman from Florida, Mr. FOLEY, the gentleman from Louisiana, Mr. JINDAL, the Oklahoma delegation and the Ways and Means Committee for making consideration of this legislation possible. I would urge Members to support passage of this legislation.

BREAK IN TRANSCRIPT

http://thomas.loc.gov