Bill would end deduction for losses from some natural disasters

WASHINGTON—Th e House Republican tax bill would eliminate the deduction for personal losses from wildfires, earthquakes and other natural disasters, but keep the break for victims of the recent severe hurricanes.

If the bill becomes law, the deduction would disappear next year, but would be available for victims of the massive wildfires that struck Northern California last month—as long as they can figure out their uninsured losses and include them on their 2017 tax return.

The legislation specifically repeals the deduction for personal casualty losses. The Internal Revenue Service describes casualty losses as including those from “natural disasters like hurricanes, tornadoes, floods and earthquakes. It can also include losses from fires, accidents, thefts or vandalism.”

In the case of a major disaster, Congress still would be able to pass special legislation offering tax breaks for victims, as it has done in the past.

But such bills would be difficult to pass for smaller scale incidents that still are devastating to the victims, said Rep. Brad Sherman, D-Calif.

“Let’s say your home burns down and it isn’t a disaster that CNN covers,” he said. “You’re affected the same way, whether it’s nine of your neighbors or 900 of your neighbors that lose homes.”

Rep. Mike Thompson, D-Calif., called the elimination of the deduction “cruel” and “heartless.”

“There’s never been a fire like this in our country,” Thompson said of the Northern California wildfires.

“Do you really think that we’re going to be able to go in, assess all of the costs, get everything cleaned up, figure out where people are going to stand in time to do their taxes?” Thompson told colleagues on the House Ways and Means Committee on Monday night as they began debating the legislation. “It’s not going to happen.”

Rep. Tom Rice, R-S.C., said California residents could file amended 2017 returns later.