Proposed Law to Increase Tax Relief for Tornado-Hit Areas

In 2011, many states, especially in the South Eastern side of the United States, have experiences seasons of bad weather including storms and tornadoes. The severe impact of bad weather has continued to bear untold suffering to the victims. However, in a move to provide some relief for these victims, the senators from these hit areas are now proposing a tax relief law. The law will provide added tax credits, exemptions, and deductions to taxpayers in the regions. The bill, Southeastern Disaster Tax Relief Act of 2011, has been proposed by Alabama Republican Senator, Richard S. Shelby and backed by other senators from affected areas including Kay Hagan (Democrat – North Carolina), Mark Pryor (Democrat-Ark.), Saxby Chambliss (Republican-Ga.), James Inhofe (Republican-Okla.), Thad Cochran (Republican-Miss.), Johnny Isakson (Republican-Ga.), Claire McCaskill (Democrat-Mo.), and Roy Blunt (Republican-Mo.).

Similar Prior Laws

The bill has been fashioned in a similar way as other past laws that were created in an effort to provide relief to victims of bad weather. These laws include the Heartland Disaster Tax Relief Act of 2009, Southern Kansas Tax Relief Act of 2008, the Gulf Opportunity Zone Act, and Katrina Emergency Tax Relief Act.

Tax Relief Proposed Through the bill

The Southeastern Disaster Tax Relief Act of 2011 has proposed a wide range of tax relief provisions to the victims of the tornadoes that hit the South Eastern regions of the U.S. These provisions are listed below:

  • Withdrawal from Retirement Funds with no Penalties- Under the proposed bill, victims of the bad weather can withdraw up to a combined amount of $100,000.00 from their retirement funds including IRAs and annuities without paying a penalty.
  • Earned Income Tax Credit (EITC) and Child Tax Credits (CTC) from Previous Years – Since many of the victims lose their jobs from the disasters, the bill proposes that victims be paid the EITC and the CTC from previous incomes made.
  • No Cap for Donation Deductions – Usually, taxpayers are allowed to deduct contributions to qualifying charities to a maximum of 50% of their earnings. However, under the proposed law, taxpayers can donate beyond the 50% cap and still get full deductions for their contributions.
  • Increased Casualty Loss Relief – The casualty loss relief is an itemized deduction and thus, a deduction is made of the excess of 10% of one’s Adjusted Gross Income. However, under the Bill, this 10% limitation will be removed for the aforementioned victims.
  • Additional Education Tax Relief – The Hope Credit cap would be increased to $3,000.00 and the Lifetime Learning Credit would be increased from 20% to 40%; a cap of $4,000.00.
  • Tax Exemption for Displaced Homes – Victims of the bad weather who get displaced from their homes would get further tax relief of $500.00 for each individual.
  • No Taxation for Debt Cancellation – Any victim who gets his or her debts canceled by a financial institution because of the bad weather would not pay tax for the canceled debt under the proposed law.
  • Tax Credit for Small Businesses that Keep their Employees – The bill proposed that small businesses that continue to keep paying their employees, even after bad weather hurts their businesses, would get a 40% tax credit. This credit will only be eligible to employers with less than 200 employees.
  • Write Off for Demolition Costs – Businesses would also be allowed to account any demolition costs due to the bad weather as an operational expense as opposed to accounting it as a capital expense. This means that the business can deduct the whole amount of the demolition in the same year as opposed to capitalizing the expense and depreciating it over several years.

Tax Relief Consultants

Tax relief consultants have one goal in mind, and that’s to find practical solutions to tax problems. The key word is “practical”, because a good solution is one that actually solves the problem and provides real tax relief. Overdue taxes only get worse as time passes because of the addition of penalties and interest on top of taxes you owe.

Practical Solutions

When you’re looking for practical solutions, the last place you should turn is to the IRS. People make the mistake of believing the IRS will be happy the taxpayer has approached them in an honest effort to pay their taxes. Unfortunately, the IRS sees their power as almost bestowed by divine right and will probably treat you more like a fool than an honest taxpayer.

If you’ve tried working with the IRS and have gotten nowhere, the reason is because the IRS really isn’t interested in settling. The IRS wants the full amount of payment including interest and penalties. The agent is not going to offer a compromise or a tax reduction or penalty abatement simply because you did the right thing by contacting them. Chances are the agency will wait for you to press for tax relief in order to see how much you know about such issues.

Tax relief consultants are like sending in the cavalry. Facing the IRS alone is not wise. You need reinforcements that understand the tax laws and stay abreast of all tax and tax enforcement rules. Tax specialists know what rights taxpayers have and can defend those rights at the IRS.

The best way to get tax relief is to use tax relief consultants. Consultants can force the IRS to consider the many options available for tax relief.

Resolutions That Work

Tax resolutions that work are ones that offer a way to eliminate the tax burden. This doesn’t mean you’re entitled to a reduction that can be paid immediately. It means your tax relief consultants can negotiate a tax payment plan that will eventually pay off the past due tax amount.

Of course, in some situations, the tax relief consultants will be able to negotiate a tax settlement that reduces or eliminates the taxes. It all depends on your current personal financial situation and the reasons you owe the taxes.

When you need help resolving your tax problems, tax relief consultants can help. Expert tax negotiators can work with the IRS to find reasonable and practical tax relief solutions. Attempting to address these issues alone doesn’t make any sense when you consider the history of the agency. A tax negotiator will make sure you are treated fairly according to your taxpayer rights.

Tax Relief Attorneys

Tax-relief attorneys are attorneys who help taxpayers with tax-related issues and, in particular, assist taxpayers with obtaining all of the tax relief that they are eligible for from the federal and state tax authorities. Most tax-relief attorneys focus on providing their clients with services related to offer in compromise, full audit representations, and penalty abatement petitions. Tax-relief attorneys work as private practitioners or are employed with tax firms. Most of these tax firms have dedicated tax personnel who also undertake preparation of tax forms and filing of taxes, apart from helping clients with obtaining tax relief.

The federal and state tax authorities have numerous tax-relief programs that are aimed at reducing the tax burden on the taxpayers. Most of the tax-relief measures come under property tax relief, income tax relief, and relief for small business owners. However, working through the tax forms and finally obtaining the eligible tax relief is quite a challenge to many taxpayers. Tax-relief attorneys are particularly helpful in this situation since they are trained in taxation and law and are aware of the constant changes to tax regulations and legislations both at the federal and state levels. Since tax relief is targeted in a large part at taxpayers belonging to the low income and senior citizen categories, the services of a tax-relief attorney can be very crucial in ensuring that the tax relief is quickly and easily obtained.

In short, tax-relief attorneys are professionals who help with resolving tax-related issues. The broad services that they provide can be listed as settling tax debt for a fraction of the debt; stopping wage garnishment, tax levies, and property seizures; settling state and payroll tax; trust fund recovery; tax planning; audit representation; and investment advice. So, even though tax-relief attorneys focus on providing services related mostly to tax relief, they also engage in other tax-related work.