H.R.1093 - Natural Disaster Property Protection Act of 2025 (119th Congress)
Summary
H.R. 1093, the Natural Disaster Property Protection Act of 2025, aims to amend the Internal Revenue Code of 1986 by increasing the threshold for information reporting on payments related to qualified natural disaster expenses. Currently, businesses must report payments of $600 or more to the IRS. This bill proposes raising that threshold to $5,000 for expenses related to mitigating risks or repairing damages to real property caused by natural disasters or extreme weather.
The bill affects both Section 6041 (Returns Regarding Payment in Course of Trade or Business) and Section 6041A (Returns Regarding Payments of Remuneration for Services) of the Internal Revenue Code. The changes would apply to amounts paid or incurred after the enactment of the law.
Expected Effects
The primary effect of this bill would be to reduce the administrative burden on businesses and individuals who make or receive payments for natural disaster-related expenses. By raising the reporting threshold, fewer transactions would trigger the information reporting requirement. This could lead to some reduction in tax revenue collected due to decreased scrutiny on smaller transactions, but it could also encourage more investment in disaster preparedness and recovery.
Potential Benefits
- Reduced paperwork and compliance costs for small businesses and individuals involved in disaster recovery.
- Increased efficiency for the IRS by reducing the volume of information returns processed.
- Potentially encourages more investment in disaster preparedness and mitigation by reducing the reporting burden.
- Simplifies tax compliance for those affected by natural disasters.
- May lead to quicker recovery times after natural disasters due to reduced administrative hurdles.
Potential Disadvantages
- Potential for reduced tax revenue due to decreased scrutiny on smaller transactions related to disaster expenses.
- Increased risk of underreporting or misreporting of income related to disaster recovery efforts.
- Could disproportionately benefit higher-income individuals or businesses who are more likely to incur expenses exceeding the original $600 threshold but remaining below the proposed $5,000 threshold.
- May complicate tax administration if the definition of "qualified natural disaster expense" is unclear or subject to interpretation.
- Possible perception of unfairness if the increased threshold is seen as a tax break for those affected by disasters, while others do not receive similar relief.
Constitutional Alignment
The bill appears to align with the general welfare clause of the Constitution (Preamble), as it aims to facilitate recovery from natural disasters. Article I, Section 8 grants Congress the power to lay and collect taxes, duties, imposts, and excises, which implicitly includes the power to set thresholds for reporting requirements related to those taxes. The bill does not appear to infringe on any specific individual rights or liberties protected by the Constitution or its amendments. However, the fairness and equity of the tax system are ongoing concerns, and the bill's impact on these aspects should be considered.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).