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The text of the bill below is as of Apr 3, 2019 (Introduced). The bill was not enacted into law.
Should grants to better prepare buildings and structures for earthquakes be subject to federal taxes?
State earthquake preparedness initiatives, such as the California Residential Mitigation Program, provide grants for homeowners to retrofit their properties to better withstand earthquakes.
California’s Earthquake Brace + Bolt program Executive Director Janiele Maffei estimates that 1.2 million California houses need their program’s retrofit.
However, such grants are subject to federal taxes.
The Earthquake Mitigation Incentive and Tax Parity Act would remove federal taxes on grants that homeowners receive to retrofit their properties to better withstand earthquakes.
The House version was introduced on April 3 as bill number H.R. 2053 …
IN THE HOUSE OF REPRESENTATIVES
Mr. Thompson of California (for himself and Mr. Calvert ) introduced the following bill; which was referred to the Committee on Ways and Means
To amend the Internal Revenue Code of 1986 to exclude from gross income amounts received from State-based earthquake loss mitigation programs.
This Act may be cited as the Earthquake Mitigation Incentive and Tax Parity Act of 2019 .
Exclusion of amounts received from State-based earthquake loss mitigation programs
Part III of subchapter B of chapter 1 of the Internal Revenue Code of 1986 is amended by inserting after section 139G the following new section:
State-based earthquake loss mitigation programs
Gross income shall not include any amount received as a qualified earthquake mitigation payment.
Qualified earthquake mitigation payment
For purposes of this section—
Qualified earthquake mitigation payment
The term means any amount which is received as a loan, loan forgiveness, grant, credit, rebate, voucher, or other financial incentive pursuant to an earthquake loss mitigation program established by a State, or agency, instrumentality, or political subdivision thereof, by a residential property owner or occupant to assist with expenses paid, or obligations incurred, for earthquake loss mitigation.
Earthquake loss mitigation program
The term includes a program established by a State, or agency, instrumentality, or political subdivision thereof, by itself or together with—
an organization described in section 501(c) and exempt from tax under section 501(a),
an organization determined to be exempt from State taxes pursuant to the laws of the relevant State, or
a public instrumentality of a State pursuant to a joint exercise of powers.
Earthquake loss mitigation
The term means an activity that reduces seismic risks to a residential structure or its contents.
The term has the meaning given such term by section 4(3) of the Earthquake Hazards Reduction Act of 1977 ( 42 U.S.C. 7703(3) ).
No increase in basis
Notwithstanding any other provision of this subtitle, no increase in the basis or adjusted basis of any property shall result from any amount excluded under this subsection with respect to such property.
Denial of double benefit
Notwithstanding any other provision of this subtitle, no deduction or credit shall be allowed for, or by reason of, any expenditure to the extent of the amount excluded under subsection (a) for any qualified earthquake mitigation payment which was provided with respect to such expenditure.
The table of sections for part III of subchapter B of chapter 1 of such Code is amended by inserting after the item relating to section 139G the following new item:
Sec. 139H. State-based earthquake loss mitigation programs.
The amendments made by this section shall apply to taxable years beginning after December 31, 2018.
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