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H.R. 3823, Disaster Tax Relief and Airport and Airway Extension Act of 2017

Floor Situation

On Wednesday, September 27, 2016, the House will consider the H.R. 3823, the Airport and Airway Extension Act of 2017, under a closed rule. The bill was introduced on September 25, 2017 by Rep. Kevin Brady (R-TX) and Rep. Bill Shuster (R-PA). The bill includes H.R. 1422, the Private Flood Insurance Market Development Act of 2017, which was ordered reported by the Financial Services Committee by a vote of 58-0 on June 21, 2017. H.R. 3823 was considered on September 25, 2017 under suspension of the rules and failed by a vote of 245-171.


Summary

The bill reauthorizes the Federal Aviation Administration (FAA) for six months, provides certain tax benefits for victims of Hurricanes Harvey, Irma, and Maria, reauthorizes certain expiring health programs, and includes provisions to increase the availability of private flood insurance for individuals in flood zones.

Federal Aviation Administration Reauthorization—The bill extends the authorization of the FAA and other Federal aviation programs through March 31, 2018 at FY2017 appropriated levels. The bill also extends the collection of aviation taxes, which are deposited in the Airport and Airway Trust Fund and used to fund the agency. The current FAA authorization is set to expire on September 30, 2017.

Reauthorizing Certain Expiring Health Programs— The bill also provides for an extension for several expiring medical programs, including reauthorizing the Teaching Health Center Graduate Medical Education Program (authorized at $15 million for the first quarter of FY 2018), the Special Diabetes Program for Indians (authorized at $37.5 million for the first quarter of FY 2018), and the Medicare Patient Intravenous Immunoglobulin Demonstration Project through December 31, 2020. The bill reduces the Medicare Improvements Fund by $50 million in order to offset the cost of the short term extensions

The Private Flood Insurance Market Development Act of 2017—The bill updates current law to reinforce and strengthen requirements that flood insurance provided by private sector insurance carriers shall be accepted and considered similar to those polices offered by the National Flood Insurance Program (NFIP) to meet mandatory purchase requirements under current law for certain home owners in flood zones.

Tax Relief for Hurricanes Harvey, Irma, and Maria—The bill provides several temporary tax benefits to individuals affected by Hurricanes Harvey, Irma, and Maria.

Retirement Account Tax Provisions--The bill provides an exception to the 10-percent early retirement plan withdrawal penalty for qualified hurricane relief distributions. The bill also allows for the re-contribution of retirement plan withdrawals for home purchases cancelled due to eligible disasters. The bill increases the limit on loans not treated as retirement distributions from $50,000 to $100,000. 


Employee Retention Credit for Employers--The bill provides a tax credit for 40% of wages (up to $6,000 per employee) paid by a disaster-affected employer to an employee from a core disaster area.

Charitable Deduction--The bill temporarily suspends limitations on charitable contributions associated with qualified hurricane relief made before December 31, 2017. 

Qualified Disaster-Related Personal Casualty Losses Deduction--With respect to losses arising in the disaster area, the bill eliminates the requirement that personal casualty losses must exceed 10% of Adjusted Gross Income to qualify for deduction, and eliminates current law requirement for taxpayers to itemize. 

Special Rule for Determining the Earned Income Tax Credit and the Child Tax Credit—At the election of the taxpayer, the bill allows individuals to refer to earned income from the immediately preceding year for purposes of determining the Earned Income Tax Credit and the Child Tax Credit. These credits can increase as income increases up to a certain level for certain taxpayers. Many individuals were not able to work during these Hurricanes and as a result may have a lower income for taxable year 2017.

The bill designates tax relief provisions in this bill as an emergency requirement pursuant to the Statutory Pay-As-You-Go Act of 2010 (Statutory PAYGO) and pursuant to the concurrent resolution on the budget. 


Background
 

Most FAA programs are financed through the Airport and Airway Trust Fund (AATF), sometimes referred to as the Aviation Trust Fund. Revenues for the fund are derived from aviation-related excise taxes on passengers, cargo, and fuel. In fiscal year 2015, the AATF provided over 90 percent of the FAA's total annual funding, with the remainder coming from general fund appropriations. [1] In fiscal year 2014, the AATF had revenues of almost $13.5 billion and maintained a cash balance of more than $13 billion. The funding authorization for the Federal Aviation Administration (FAA), included in the FAA Extension, Safety, and Security Act of 2016, expires on September 30, 2016.

Flood Insurance—By law or regulation, federal agencies, federally regulated lending institutions, and government-sponsored enterprises (GSEs) must require certain property owners to purchase flood insurance as a condition of any mortgage that these entities make, guarantee, or purchase. Property owners are required to purchase flood insurance if their property is identified as being in a Special Flood Hazard Area (SFHA, which is equivalent to having a 1% or greater risk of flooding every year) and is in a community that participates in the NFIP. Historically, this has generally meant that such property owners were required to purchase a Standard Flood Insurance Policy (SFIP) from the NFIP. This bill would allow more private flood insurance policies to count towards the mandatory purchase requirement for these policies in an attempt to further develop the private flood insurance market. 

Hurricane Relief-- This bill provides a number of different temporary tax benefits for individuals in areas that President Trump issued disaster declarations under the Robert T. Stafford Disaster Relief and Emergency Assistance Act.


Cost

A Congressional Budget Office (CBO) estimate is not currently available.


Staff Contact

For questions or further information please contact John Huston with the House Republican Policy Committee by email or at 6-5539.

 

[1] See FAA Fact Sheet

115th Congress