(Washington, D.C.) – U.S. Senator David Vitter today announced that the U.S. Senate passed the Gulf Opportunity Zone Act, which includes nearly $8 billion in tax relief for areas affected by the hurricanes.

            “I’m very excited that my colleagues in the Senate understand how pivotal it was to pass this tax bill prior to Christmas,” Vitter said. “This tax bill means that victims of Hurricane Rita will receive many of the same benefits that the victims of Hurricane Katrina received right after the storm.”

            The bill allows the U.S. Department of Treasury to extend the deadline to receive the benefit of bonus depreciation that was passed in 2003. The Jobs and Growth Act of 2003 included an option for taxpayers to deduct 50 percent of the cost of certain properties to account for loss in value over time, but the deadline for placing the property in service is December 31, 2005.  For those who will not meet this deadline because of the hurricanes this year, the Treasury Department can extend this deadline for up to one year.

            For taxpayers owning less than 500 acres of timber, this bill raises the limit of reforestation cost to $20,000 and allows a five-year carryback, up from the current two-year carryback and $10,000 limit. The increase for the reforestation expensing limit is available for expenditures incurred prior to January 1, 2008.

            Employers located in the Rita GO Zone that continue to pay their employees while the business is inoperable will receive a 40 percent tax credit for wages paid up to $6,000, regardless of the size of the employer.

            Present law discourages early withdrawls from retirement plants with penalties and other limitations. The tax bill waives the 10 percent penalty tax for premature distributions from Individual Retirement Accounts and qualified retirement plans for individuals who suffered an economic loss because of Hurricane Rita and whose principal residence is located in the Rita disaster area. Individuals eligible for this waiver would be permitted to pay income tax on distributions up to $100,000 per individual over a three-year period. If the monies are recontributed to a qualified retirement play over the three-year period following the distribution date will not be required to pay these income taxes.

            “Creating additional financing options will help the devastated areas rebuild public and private facilities. These facilities play a key role in bringing jobs back to southwest Louisiana,” Vitter said.

            Other provisions of the GO Zone Act include:

• In any taxable year, a corporation’s charitable deduction may not exceed 10 percent of its taxable income. The tax bill temporarily waives limits regarding charitable cash contributions for Rita relief. This provision is effective for contributions before January 1, 2006.
• The 10 percent and $100 floor normally required for a casualty loss deductible will be waived for individual taxpayers resulting from Hurricane Rita and incurred in the disaster area, including those claimed on amended returns.

            The U.S. House of Representatives passed the bill and it will now be sent to the president for his signature.