Katrina Tax Relief Bill Heads to the White House

On September 21, 2005 the House and Senate approved legislation (H.R. 3768) that provides tax relief to individuals and employers affected by Hurricane Katrina and encourages donations to the relief effort. The President is expected to sign the bill. The bill includes provisions that would:

• Lift limits on deductions for personal casualty losses;
• Extend the time frame for spending insurance proceeds without incurring taxes;
• Waive penalties for early withdrawals form IRAs and pension plans;
• Waive taxes on canceled debts, like mortgages;
• Expand eligibility for the Work Opportunity Tax Credit;
• Provide a tax credit of up to $2,400 for small employers who keep workers on their payrolls;
• Waive tax limits on individual and corporate cash donations to charities;
• Extend deadlines for paying excise and employment taxes;
• Extend the current-law deduction for food donations to S-corporations, partnerships and sole proprietors through the end of the 2005 calendar year; and
• Provide an enhanced deduction for donations of educational books to public schools.

Based on informal reports, both the House and Senate within the next few weeks are expected to look at “follow-on” tax incentives targeted at businesses in the Gulf Coast area.

Click here for the text of the bill, a summary and revenue estimate for the legislation http://waysandmeans.house.gov/ResourceKits.asp?section=2159.

Employment Sources for Job Seekers and Providers

The Department of Labor has set up the job resource center on the web—The Katrina Recovery Job Connection. The Web site is designed to assist three specific areas: 1) individuals seeking new, full-time employment either in their home state or in a new state; 2) individuals wishing to assist in the clean-up and rebuilding efforts through temporary employment; and 3)employers who want to list jobs supporting hurricane recovery efforts or want to hire workers affected by the hurricane. The Katrina Recovery Job Connection can be found at http://www.jobsearch.org/katrinajobs or through America's Job Bank at www.ajb.org and click on Katrina Jobs.

While the site is intended to complement efforts at the state and local levels, it is also intended to make individuals evacuated to other states aware of opportunities in their home state. The site allows employers to post jobs and job seekers to search for job opportunities and post their resumes.

In addition, Monster.com, in partnership with the National Association of Manufacturers, has also set up a Web site for employers and prospective employees at: http://hurricanerelief.monster.com. Employers can post jobs for dislocated victims of Katrina at no cost. If you would like to post a job associated with the reconstruction effort, or would like to hire those impacted by the hurricane, please call (1-800) Monster for a FREE job posting. All free job postings must be for positions created as a direct result of the hurricane or those designed exclusively for hurricane victims. If you have multiple jobs to post, please contact neil.costa@monster.com and Monster will contact you to help streamline the process.

Temporary Waiver of I-9 Sanctions

On September 6, the U.S. Department of Homeland Security (DHS) announced that it will not sanction employers for hiring victims of Hurricane Katrina who, at this time, are unable to provide documentation normally required under Section 274A of the Immigration and Nationality Act. DHS will not bring sanctions against employers for hiring individuals evacuated or displaced as a result of Hurricane Katrina or otherwise eligible for employment but who currently lack personal documents. DHS will review this policy at the end of 45 days and make further recommendations. http://www.dhs.gov/dhspublic/display?content=4788

OFCCP Exemption

The U.S. Department of Labor has granted a limited exemption and waiver from some of the paperwork requirements of the laws administered by the Office of Federal Contract Compliance Programs (OFCCP).

The limited exemption and waiver from the written affirmative action program (AAP) applies only to contractors providing Hurricane Katrina relief. Federal contractors must still make sure they provide workplace postings, continue record keeping and retention, and continue listing employment openings with local employment service offices. The exemption and waiver is for three months, subject to a possible extension should special circumstances arise. http://www.dol.gov/esa/ofccp/pdf/Katrina1.pdf

Safety and Health Information for Hurricane Recovery Workers

OSHA has provided a variety of information materials focusing on safety and health hazards issues that may affect employers and workers involved in cleanup and recovery operations in the wake of Hurricane Katrina. Information focusing on the effects of heat stress, handling human remains, and search and rescue operations are the newest fact sheets posted on OSHA’s Hurricane Recovery page. News releases, public service announcements and links to other resources are available via the Web page. OSHA plans to update this site regularly throughout the recovery phase of the operation on the Gulf Coast.

Additional useful documents and links to emergency response information can be found at www.aiha.org under “Emergency Response” The American Industrial Hygiene Association has information on an industrial hygiene deployment checklist, information on the industrial hygienist role in emergency response, essential safety and health information for hurricane recovery efforts, and more.

Suspension of Davis-Bacon Act Requirements

On September 8th, President Bush sent a letter to Congress suspending application of the Davis-Bacon Act, which is the federal law that sets workers’ pay on federal construction contracts, for the Gulf areas of Alabama, Florida, Louisiana and Mississippi. http://www.whitehouse.gov/news/releases/2005/09/20050908-5.html

Unemployment & Workers Compensation Information

If employers get inquiries from displaced workers on how to file unemployment claims, they can be directed to the Labor Department, which has a toll-free number (1-866) 4-USA-DOL) and a Web site, www.dol.gov (click on Department of Labor's Hurricane Recovery Assistance Page), set up to help evacuees file unemployment insurance claims.

Another good source of information on unemployment and workers compensation is the UWC - Strategic Services on Unemployment & Workers' Compensation (UWC). http://www.uwcstrategy.org/Issues/index.shtml The UWC site provides instructions for filing for unemployment compensation and disaster unemployment assistance claims in Alabama, Louisiana and Mississippi.

IRS Raises Mileage Reimbursement

Skyrocketing gas prices has prompted the IRS to up the optional standard mileage rates for the final four months of 2005 to 48.5 cents. In an announcement on September 9, the IRS said the rate will increase 8 cents a mile for all business miles driven between September 1 and December 31, up from the 40.5 cent rate in effect for the first eight months of this year.

The rate is used to compute the deductible costs of operating a car in connection with a business. The federal government and many businesses use the standard to reimburse their employees for mileage as well.

The new four-month rate for computing deductible medical or moving expenses will be 22 cents a mile, up from 15 cents for the first eight months of 2005. The rate charitable organizations will use is set by statute, not the IRS, and remains at 14 cents a mile.

IRS Re-Establishes Leave Donation Program

To speed cash contributions for those affected by the hurricane disaster, on September 8, the IRS unveiled special, nationwide relief for leave donation program. Under this program, employees can donate their vacation, sick or personal leave in exchange for cash payments by their employers to qualified charitable organizations assisting relief efforts.

How it works
Employers will be able to make deductible cash contributions to qualified organizations, in the amount of the donated leave, until the end of 2006. While employees will not be able to deduct the donated leave, they do not have to include it as income.

The notice assumes a scenario where, in lieu of leave donated by employees, employers send cash payments to organizations qualified under tax code Section 170(c). The payments must be specifically made for Hurricane Katrina relief, and paid to the organizations before Jan. 1, 2007.

If those conditions are met, IRS said, the agency:

• will not assert that the payments constitute gross income or wages to employees,
• will not assert that the opportunity to make such an election results in constructive receipt of gross income or wages for employees, and
• will not assert that an employer will only be permitted to deduct these cash payments under the rules of tax code Section 170(c), rather than the rules of Section 162.

According to IRS, eligible cash payments do not have to be reflected in Box 1, Box 3, or Box 5 of the Form W-2.

Tax benefit for employees
Employees get a tax break too, since they would otherwise have to pay tax on the income earned while they were on leave.

Hurricane Disaster Relief –
How your company & employees can help.

We at Employers Group want to express our deep compassion and concern for those affected by the devastation in the Gulf Coast area due to Hurricane Katrina.

We have put together the following information for businesses and individuals that want to provide specific relief resources and/or contributions to aid the affected communities.

(1) What EMPLOYERS can do.

The Homeland Security Information Network (HSIN) web portal at www.swern.gov is seeking businesses across the nation that can donate, rent or sell capabilities or supplies such as (for example only):

• Bottled water
• Transportation (trucking companies)
• Housing in the Gulf area (real estate companies, motels/hotels/apartments)
• Temporary housing (tents)
• Food
• Lumber/glass and building supplies
• Diapers
• Medical Supplies

There are a myriad of needs, and this site www.swern.gov provides access to the National Emergency Resource Registry (NERR). Click the icon in the upper right corner to find out where to list the resources you can offer. This is a secure OFFICIAL U.S. Government system (tied to FEMA) to facilitate the marrying of capabilities and supplies with needs.

(2) Providing assistance through charitable organizations.
You can direct your employees to an IRS-approved list of charities by using the search feature at FirstGov.gov. In addition, the IRS has prepared Publication 3833, Disaster Relief: Providing Assistance Through Charitable Organizations, which may be helpful for employees who want to make individual contributions.

The IRS also issued these following reminders to citizens and charities:

• IRS Disaster Relief main page
• Publication 78, lists charities with tax-exempt status, and a searchable on-line version is available through IRS.gov
• Publication 526, Charitable Contributions, provides information on making contributions to charities
• Taxpayers may claim a deduction for contributions to charitable organizations only if they itemize deductions on Schedule A of their Form 1040. They should retain proof of the contribution and, if the amount is more than $250, must obtain an acknowledgement from the charity for the amount to be deductible.

(3) Unemployment Assistance
The federal Disaster Unemployment Assistance (DUA) program provides financial assistance to individuals whose employment or self-employment has been lost or interrupted as a direct result of a major disaster declared by the President of the United States. This program, financed out of federal general revenue rather than unemployment taxes, is administered by the states as agents of the federal government. NOTE: Individuals are eligible for DUA benefits only if they are not eligible for regular unemployment insurance benefits (under any state or federal law).
More information on the DUA program is available at the following website: http://ows.doleta.gov/unemploy/disaster.asp

(4) How to Contact Red Cross Directly
Click here to donate your time or funds to aid those in need.