S. 3372: Protect Innocent Victims of Taxation After Fire Extension Act

This bill, known as the Protect Innocent Victims of Taxation After Fire Extension Act, proposes amendments to the Internal Revenue Code regarding taxation related to wildfire relief payments. Here are the key components of the bill:

Exclusion from Gross Income

The bill establishes that any amount received by individuals as a "qualified wildfire relief payment" is not to be included in their gross income for tax purposes. This means that individuals will not have to pay taxes on these payments they receive as compensation for damages caused by wildfires.

Definition of Qualified Wildfire Relief Payment

A "qualified wildfire relief payment" is defined as any payment received by an individual for compensation related to:

• Losses or damages due to wildfires
• Additional living expenses incurred while recovering from a wildfire
• Lost wages (excluding wages that would have been paid by an employer)
• Compensation for personal injuries, death, or emotional distress arising from wildfire incidents

However, these payments are only excluded from gross income if the losses or damages have not already been compensated through insurance or other means.

Definition of Qualified Wildfire Disaster

A "qualified wildfire disaster" refers to any disaster declared by federal authorities due to forest or range fires after December 31, 2014.

Denial of Double Benefit

The bill also includes provisions to prevent individuals from receiving a double benefit. This means:

• No deductions or credits can be claimed for amounts excluded under this section when filing taxes related to expenses covered by the relief payments.
• There will be no changes in the basis or adjusted basis of property that result from amounts excluded under this section.

Effective Date

The provisions of this bill will take effect for payments received after December 31, 2025.

Relevant Companies

None found.