Senator Chuck Grassley says the IRS has just issued new documents which outline the tax law changes congress passed in October to help disaster victims. "As Iowans and taxpreparers in disaster areas begin preparing their tax returns, I hope they’ll use this information to find out what tax relief might be available to them," Grassley says.
Grassley is the top-ranking Republican on the Senate Finance Committee and he helped draft the legislation that granted new tax benefits for 2008 disaster victims. "The bill that I got passed was modeled after one that I passed in 2005 for victims of Hurricane Katrina," Grassley says. "The new law is designed to help small businesses and individuals."
For example, a small business could more quickly write-off the expense of fixing up their damaged buildings. They’d also get a tax credit for keeping employees on rather than laying them off during the disaster recovery process. Iowans who dip into their retirement accounts to deal with storm damage to their home can do so without paying the tax penalty for withdrawing money from their IRA or 401(k).
Grassley says there’s another part that can help storm-damaged areas, too, by temporarily increasing the amount of bonds cities, counties and the state can issue. In other words, it increases the amount of money local governments can borrow. "There’s going to be a very dramatic need for it in times of disaster, most than in normal times," Grassley says.
On May 25, a powerful tornado struck Grassley’s hometown of New Hartford, causing extensive damage. A few business owners in the town have decided not to reopen their stores.