H.R. 7825: Doug LaMalfa Protect Innocent Victims of Taxation After Fire Extension Act (119th Congress) Bill Summary

This bill, titled the Doug LaMalfa Protect Innocent Victims of Taxation After Fire Extension Act, seeks to amend the Internal Revenue Code to provide tax relief for individuals who receive payments due to losses or damages caused by wildfires. Here are the key components of the bill:

Exclusion of Wildfire Relief Payments from Gross Income

The bill states that individuals will not have to count certain payments they receive as income when filing their taxes. Specifically, it introduces a new section in the tax code that defines "qualified wildfire relief payments." These payments include compensation for losses, expenses, or damages related to qualified wildfire disasters. This includes coverage for:

Additional living expenses
Lost wages (with exceptions for employer-paid wages)
Personal injuries
Death
Emotional distress

However, these payments can only be excluded from gross income if they are not compensated for by insurance or other means.

Definition of Qualified Wildfire Disaster

The bill defines a "qualified wildfire disaster" as any federally declared disaster resulting from forest or range fires, provided that such a declaration occurred after December 31, 2014.

Limitation on Deductions and Credits

To prevent double benefits, the bill specifies that no deductions or credits can be claimed for any expenditure that corresponds to the amounts excluded from gross income under this new provision. This means that if an individual receives a relief payment, they cannot also claim a tax deduction related to the same expense. Additionally, the bill states that no increase in property basis can result from amounts excluded under this section.

Termination of Provisions

The provisions of this bill will not apply to any amounts received after December 31, 2032. This establishes a timeframe during which individuals can benefit from this tax relief related to wildfire payments.