Emergency Savings Accounts Act of 2023
This bill allows an individual taxpayer occupying a residence a deduction from gross income for up to $5,000 of amounts paid into such taxpayer's emergency savings account. The bill defines emergency savings account as an account established exclusively to pay the qualified disaster and public health emergency expenses of the account beneficiary.
The bill defines qualified disaster and public health emergency expenses as disaster mitigation expenses, disaster recovery expenses, public health emergency expenses, and unemployment-related expenses.
[Congressional Bills 118th Congress]
[From the U.S. Government Publishing Office]
[H.R. 312 Introduced in House (IH)]
<DOC>
118th CONGRESS
1st Session
H. R. 312
To amend the Internal Revenue Code of 1986 to provide emergency savings
accounts for individuals.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
January 12, 2023
Mr. Cloud introduced the following bill; which was referred to the
Committee on Ways and Means
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide emergency savings
accounts for individuals.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Emergency Savings Accounts Act of
2023''.
SEC. 2. DEDUCTION FOR CONTRIBUTIONS TO EMERGENCY SAVINGS ACCOUNTS.
(a) In General.--Part VII of subchapter B of chapter 1 of the
Internal Revenue Code of 1986 (relating to additional itemized
deductions for individuals) is amended by redesignating section 224 as
section 225 and by inserting after section 223 the following new
section:
``SEC. 224. EMERGENCY SAVINGS ACCOUNTS.
``(a) Deduction Allowed.--In the case of a eligible individual,
there shall be allowed as a deduction for the taxable year an amount
equal to the aggregate amount paid during such taxable year by or on
behalf of such individual to an emergency savings account of such
individual.
``(b) Limitation.--
``(1) In general.--The amount allowed as a deduction under
subsection (a) to an individual for the taxable year shall not
exceed $5,000.
``(2) Partial year of eligibility.--In the case of an
individual who is an eligible individual for only a portion of
the taxable year, the limitation under paragraph (1) shall be
same proportion of $5,000 as such portion bears to the entire
taxable year.
``(c) Eligible Individual.--For purposes of this section, the term
`eligible individual' means any individual if such individual occupied
any residence in the United States at any time during the taxable year.
``(d) Emergency Savings Account.--For purposes of this section--
``(1) In general.--The term `emergency savings account'
means a trust created or organized in the United States as an
emergency savings account exclusively for the purpose of paying
the qualified disaster and public health emergency expenses of
the account beneficiary, but only if the written governing
instrument creating the trust meets the following requirements:
``(A) Except in the case of a rollover contribution
described in subsection (f)(5), no contribution will be
accepted--
``(i) unless it is in cash, or
``(ii) to the extent such contribution,
when added to previous contributions to the
trust for the calendar year, exceeds the dollar
limitation in effect under subsection (b).
``(B) The trustee is a bank (as defined in section
408(n)), an insurance company (as defined in section
816), or another person who demonstrates to the
satisfaction of the Secretary that the manner in which
such person will administer the trust will be
consistent with the requirements of this section.
``(C) No part of the trust assets will be invested
in life insurance contracts.
``(D) The assets of the trust will not be
commingled with other property except in a common trust
fund or common investment fund.
``(E) The interest of an individual in the balance
in his account is nonforfeitable.
``(2) Qualified disaster and public health emergency
expenses.--The term `qualified disaster and public health
emergency expenses' means--
``(A) disaster mitigation expenses,
``(B) disaster recovery expenses,
``(C) public health emergency expenses, and
``(D) unemployment related expenses.
``(3) Disaster mitigation expenses.--The term `disaster
mitigation expenses' means expenses for any of the following
with respect to the residence referred to in subsection (c):
``(A) Tornado safe rooms manufactured or
constructed in accordance with FEMA 320 or FEMA 361
guidance or tornado shelters manufactured or
constructed in accordance with the National Storm
Shelter/International Code Council 500 standard.
``(B) Opening protection, including impact and wind
resistant windows, exterior doors, and garage doors.
``(C) Reinforcement of roof-to-wall and floor-to-
wall connections for wind or seismic activity.
``(D) Roof covering for impact, fire, or high wind
resistance.
``(E) Cripple and shear walls to resist seismic
activity.
``(F) Flood resistant building materials.
``(G) Elevating structures and utilities above base
flood elevation.
``(H) Fire resistant exterior wall assemblies/
systems.
``(I) Lightning protection systems.
``(J) Whole home standby generators.
``(K) Any activity specified by the Secretary as
appropriate to mitigate the risks of future hazards
(including earthquake, flood, hail, hurricane,
sinkhole, lightning, power outage, tornado, and
wildfire) and other natural disasters.
``(4) Disaster recovery expenses.--The term `disaster
recovery expenses' means with respect to the residence referred
to in subsection (c) any expense incurred to replace or repair
disaster-related uninsured personal casualty personal losses
totaling $1,000 or greater.
``(5) Disaster-related uninsured personal casualty loss.--
The term `disaster-related uninsured personal casualty loss'
means a personal casualty loss (as defined in section
165(h)(3)(B), determined without regard to the second sentence
thereof) attributable to a State or federally declared disaster
for which a deduction is allowable under section 165 (without
regard to subsection (h)(1)).
``(6) Federally declared disaster.--The term `federally
declared disaster' has the meaning given such term by section
165(i)(5).
``(7) Public health emergency expenses.--The term `public
health emergency expenses' means expenses for any of the
following with respect to an individual referred to in
subsection (c) if paid or incurred while a public health
emergency declaration is in effect and while such individual is
unemployed or has their employment status reduced from full-
time status:
``(A) Child care expenses.
``(B) Out-of-pocket health care costs, including
insurance premiums.
``(C) Housing expenses including mortgage, rent, or
property taxes.
``(D) Utilities.
``(8) Public health emergency declaration.--The term
`public health emergency declaration' means any declaration of
a public health emergency by the Secretary of Health and Human
Services under section 319 of the Public Health Service Act (42
U.S.C. 247d).
``(9) Unemployment related expenses.--The term
`unemployment related expenses' means, in the case of an
account beneficiary with any period of unemployment during the
taxable year, any expenses during such taxable year which, in
the aggregate, do not exceed $500.
``(10) Account beneficiary.--The term `account beneficiary'
means the individual on whose behalf the emergency savings
account was established.
``(e) Treatment of Account.--
``(1) In general.--An emergency savings account is exempt
from taxation under this subtitle unless such account has
ceased to be an emergency savings account. Notwithstanding the
preceding sentence, any such account is subject to the taxes
imposed by section 511 (relating to imposition of tax on
unrelated business income of charitable, etc. organizations).
``(2) Account terminations.--Rules similar to the rules of
paragraphs (2) and (4) of section 408(e) shall apply to
emergency savings accounts, and any amount treated as
distributed under such rules shall be treated as not used to
pay qualified disaster and public health emergency expenses.
``(f) Tax Treatment of Distributions.--
``(1) Amounts used for qualified disaster and public health
emergency expenses.--Any amount paid or distributed out of an
emergency savings account which is used exclusively to pay
qualified disaster and public health emergency expenses of any
account beneficiary shall not be includible in gross income.
``(2) Inclusion of amounts not used for qualified disaster
and public health emergency expenses.--Any amount paid or
distributed out of an emergency savings account which is not
used exclusively to pay the qualified disaster and public
health emergency expenses of the account beneficiary shall be
included in the gross income of such beneficiary.
``(3) Excess contributions returned before due date of
return.--
``(A) In general.--If any excess contribution is
contributed for a taxable year to any emergency savings
account of an individual, paragraph (2) shall not apply
to distributions from the emergency savings accounts of
such individual (to the extent such distributions do
not exceed the aggregate excess contributions to all
such accounts of such individual for such year) if--
``(i) such distribution is received by the
individual on or before the last day prescribed
by law (including extensions of time) for
filing such individual's return for such
taxable year, and
``(ii) such distribution is accompanied by
the amount of net income attributable to such
excess contribution.
Any net income described in clause (ii) shall be
included in the gross income of the individual for the
taxable year in which it is received.
``(B) Excess contribution.--For purposes of
subparagraph (A), the term `excess contribution' means
any contribution (other than a rollover contribution
described in paragraph (5)) which is not deductible
under this section.
``(4) Additional tax on distributions not used for
qualified disaster and public health emergency expenses.--
``(A) In general.--The tax imposed by this chapter
on the account beneficiary for any taxable year in
which there is a payment or distribution from an
emergency savings account of such beneficiary which is
includible in gross income under paragraph (2) shall be
increased by 20 percent of the amount which is so
includible.
``(B) Exception for disability or death.--
Subparagraph (A) shall not apply if the payment or
distribution is made after the account beneficiary
becomes disabled within the meaning of section 72(m)(7)
or dies.
``(5) Rollover contribution.--An amount is described in
this paragraph as a rollover contribution if it meets the
requirements of subparagraphs (A) and (B).
``(A) In general.--Paragraph (2) shall not apply to
any amount paid or distributed from an emergency
savings account to the account beneficiary to the
extent the amount received is paid into an emergency
savings account for the benefit of such beneficiary not
later than the 60th day after the day on which the
beneficiary receives the payment or distribution.
``(B) Limitation.--This paragraph shall not apply
to any amount described in subparagraph (A) received by
an individual from an emergency savings account if, at
any time during the 1-year period ending on the day of
such receipt, such individual received any other amount
described in subparagraph (A) from an emergency savings
account which was not includible in the individual's
gross income because of the application of this
paragraph.
``(g) Cost-of-Living Adjustment.--
``(1) In general.--In the case of any taxable year
beginning in a calendar year after 2023, each $5,000 amount in
subsection (b) and the $3,000 amount in subsection (d)(4) shall
be increased by an amount equal to--
``(A) such dollar amount, multiplied by
``(B) the cost-of-living adjustment determined
under section 1(f)(3) for the calendar year in which
such taxable year begins determined by substituting
`calendar year 2022' for `calendar year 2016' in
subparagraph (A)(ii) thereof.
``(2) Rounding.--If any increase under paragraph (1) is not
a multiple of $50, such increase shall be rounded to the
nearest multiple of $50.
``(h) Special Rules.--
``(1) Denial of deduction to dependents.--No deduction
shall be allowed under this section to any individual with
respect to whom a deduction under section 151 is allowable to
another taxpayer for a taxable year beginning in the calendar
year in which such individual's taxable year begins.
``(2) Taxable year must be full taxable year.--Except in
the case of a taxable year closed by reason of the death of the
taxpayer, no deduction shall be allowed under this section in
the case of a taxable year covering a period of less than 12
months.
``(3) Certain rules to apply.--Rules similar to the
following rules shall apply for purposes of this section:
``(A) Section 219(d)(2) (relating to no deduction
for rollovers).
``(B) Section 219(f)(3) (relating to time when
contributions deemed made).
``(C) Section 219(f)(5) (relating to employer
payments).
``(D) Section 408(g) (relating to community
property laws).
``(E) Section 408(h) (relating to custodial
accounts).
``(F) Section 223(f)(7) (relating to transfer of
account incident to divorce).
``(G) Section 223(f)(8) (relating to treatment
after death of account beneficiary).
``(4) Coordination with casualty loss deduction.--No
deduction shall be allowed under section 165 for a loss for
which a disaster recovery expense payment is made from an
emergency savings account.
``(i) Reports.--The Secretary may require the trustee of an
emergency savings account to make such reports regarding such account
to the Secretary and to the account beneficiary with respect to
contributions, distributions, the return of excess contributions, and
such other matters as the Secretary determines appropriate.''.
(b) Deduction Allowed Whether or Not Individual Itemizes Other
Deductions.--Section 62(a) of such Code is amended by inserting after
paragraph (21) the following new paragraph:
``(22) Emergency savings accounts.--The deduction allowed
by section 224.''.
(c) Tax on Excess Contributions.--Section 4973 of such Code
(relating to tax on excess contributions to certain tax-favored
accounts and annuities) is amended--
(1) by striking ``or'' at the end of subsection (a)(5), by
inserting ``or'' at the end of subsection (a)(6), and by
inserting after subsection (a)(6) the following new paragraph:
``(7) an emergency savings account (within the meaning of
section 224(d)),''; and
(2) by adding at the end the following new subsection:
``(i) Excess Contributions to Emergency Savings Accounts.--For
purposes of this section, in the case of emergency savings accounts
(within the meaning of section 224(d)), the term `excess contributions'
means the sum of--
``(1) the aggregate amount contributed for the taxable year
to the accounts (other than a rollover contribution described
in section 224(f)(5)) which is not allowable as a deduction
under section 224 for such year, and
``(2) the amount determined under this subsection for the
preceding taxable year, reduced by the sum of--
``(A) the distributions out of the accounts which
were included in gross income under section 224(f)(2),
and
``(B) the excess (if any) of--
``(i) the maximum amount allowable as a
deduction under section 224(b) for the taxable
year, over
``(ii) the amount contributed to the
accounts for the taxable year.
For purposes of this subsection, any contribution which
is distributed out of the emergency savings account in
a distribution to which section 224(f)(3) applies shall
be treated as an amount not contributed.''.
(d) Failure To Provide Reports on Emergency Savings Accounts.--
Section 6693(a)(2) of such Code is amended by redesignating
subparagraphs (D), (E), and (F) as subparagraphs (E), (F), and (G),
respectively, and by inserting after subparagraph (C) the following new
subparagraph:
``(D) section 224(i) (relating to emergency savings
accounts),''.
(e) Clerical Amendment.--The table of sections for part VII of
subchapter B of chapter 1 of such Code is amended by striking the last
item and inserting the following:
``Sec. 224. Emergency savings accounts.
``Sec. 225. Cross reference.''.
(f) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2022.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Ways and Means.
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