Overview
Title
To amend the Internal Revenue Code of 1986 to provide a credit for hazard mitigation projects in connection with certain working waterfront property.
ELI5 AI
H.R. 9909 is a bill that wants to help protect places near the water, like where people fish or build boats, by giving them a bit of money back when they make their buildings safer. It gives them a 30% discount, like a coupon, but only up to $300,000, to fix things like flooding or the edges of the shore.
Summary AI
H.R. 9909, known as the "Working Waterfront Disaster Mitigation Tax Credit Act," aims to amend the Internal Revenue Code of 1986. It introduces a tax credit for hazard mitigation projects associated with certain working waterfront properties. The bill allows a 30% tax credit on qualified investments, with a maximum credit of $300,000 per taxpayer for projects like flood risk reduction, shoreline stabilization, and flood-proofing. The tax credit is designed to help businesses reduce risk from natural hazards, ensuring properties used for activities like commercial fishing, boatbuilding, and related areas are protected and sustainable.
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AnalysisAI
The bill titled "Working Waterfront Disaster Mitigation Tax Credit Act," identified as H.R. 9909, proposes amendments to the Internal Revenue Code of 1986. Its primary objective is to introduce a tax credit aimed at supporting hazard mitigation projects linked to working waterfront properties. These are properties involved in water-dependent commercial activities like fishing, boating, and aquaculture.
General Summary of the Bill
This legislative proposal seeks to incentivize investments in disaster mitigation for working waterfront areas by offering a tax credit amounting to 30% of the qualified project investments. The maximum credit available is capped at $300,000 per taxpayer, and the eligibility for these credits hinges on adherence to specific building codes and flood risk reduction methods. Projects must incorporate mitigation strategies such as structural elevation and floodproofing, aiming to shield these crucial commercial areas from natural disasters like flooding and erosion.
Summary of Significant Issues
Several issues emerge from the bill which warrant careful consideration:
Credit Limitation: The bill limits the tax credit to $300,000, which might be insufficient for larger projects. Given the high potential cost of thorough disaster mitigation efforts, this cap might not provide adequate support for significant undertakings.
Inflation Adjustments and Complexity: The bill includes provisions for adjusting credit limits and eligibility thresholds for inflation. However, the language used can be intricate and challenging to interpret, potentially leading to confusion and errors.
Aggregation Rules: Rules governing how businesses are aggregated for credit limit purposes could inadvertently disadvantage some entities by grouping them in a way that limits their access to funds or eligibility based on revenue thresholds.
Standards and Compliance: The reliance on the 2021 International Building Code for determining project eligibility up until 2032 may not account for future advancements or changes in building standards, which could result in compliance issues down the line.
Impact on the Public
The bill's introduction of a tax credit is likely to incentivize property owners and businesses in waterfront areas to invest more in disaster mitigation measures. This could enhance the resilience of these properties to natural disasters, benefiting the broader public by potentially reducing the overall economic impact of such events. Improved resilience could translate into fewer disruptions in water-dependent economic activities, safeguarding jobs and local economies reliant on these sectors.
Impact on Specific Stakeholders
Small to Medium Businesses: These stakeholders may benefit substantially, as the tax credit can offset the costs involved in safeguarding waterfront properties. However, businesses hovering just above the $47,000,000 gross receipts threshold might miss out on these benefits due to the gross receipts test, which might not be entirely reflective of their contribution to the waterfront economy.
Local Communities and Governments: They stand to gain from more resilient infrastructure, which can lead to economic stability and additional employment opportunities through the demanded mitigation projects. However, the complexity in compliance and potential for inadequate funding may pose challenges for small local administrations attempting to maximize these opportunities.
Construction and Engineering Firms: These entities could see an uptick in demand for their services as property owners seek to qualify for the credits through eligible mitigation projects. Yet, the specificity around compliance with certain building codes might limit competition to only those businesses with existing expertise in these areas.
In conclusion, the "Working Waterfront Disaster Mitigation Tax Credit Act" seeks to contribute positively to the economic and environmental resilience of coastal and waterfront communities. A careful balance of adequately addressing the identified issues with clear guidelines and flexible standards can maximize its effectiveness and equitable access for diverse stakeholders.
Financial Assessment
The "Working Waterfront Disaster Mitigation Tax Credit Act," introduced as H.R. 9909, attempts to provide financial relief through a tax credit designed to support hazard mitigation projects for certain waterfront properties. This legislation primarily focuses on alleviating risks from natural hazards that threaten properties used for activities such as commercial fishing and boatbuilding.
Overview of Financial Components
The bill establishes a 30% tax credit on the investment into eligible mitigation projects, with a focus on reducing damages from threats like floods and shoreline erosion. This credit is targeted directly towards projects aimed at enhancing the safety and resilience of working waterfront properties, which are critical in supporting various water-dependent economic activities.
A critical aspect of the bill is the maximum credit limit of $300,000 per taxpayer. This monetary cap intends to balance providing sufficient support while controlling fiscal exposure. Each taxpayer cannot claim more than this limit, irrespective of the total investment made into mitigation projects.
Financial Limitations and Implications
The cap of $300,000 could present a challenge for larger or more comprehensive projects. Such projects might require substantial capital, and the existing cap may not provide adequate financial incentive for businesses undertaking extensive mitigation work. This could potentially limit the effectiveness of the bill in encouraging significant infrastructural investments, as the total cost of some mitigation efforts might far exceed the credit available.
The bill includes provisions for inflation adjustments, which automatically increase both the credit limit and the gross receipts test limit beginning after December 31, 2025. This mechanism addresses concerns around fiscal policy keeping pace with economic changes by linking adjustments to the cost-of-living index. However, the language outlining these adjustments might lead to misunderstandings, as it includes complex legislative references that could confuse taxpayers and businesses trying to plan financially for long-term projects.
Relationships to Identified Issues
The gross receipts test, which sets a maximum threshold of $47,000,000 for a business to qualify for these credits, excludes entities just above this limit. This could disproportionately impact certain businesses that slightly exceed this figure but are still heavily reliant on waterfront operations and would greatly benefit from hazard mitigation.
Additionally, the bill enforces aggregation rules, treating multiple businesses under the control of the same entity as one. This can dramatically affect both the $300,000 credit limit and the $47,000,000 gross receipts test, complicating tax planning for businesses structured across various legal entities.
Lastly, there is an inherent tension in using existing building codes—such as the 2021 International Building Code—for compliance assessments, especially as these standards may evolve over time. This constraint might inadvertently discourage future technological or methodological innovations in mitigation techniques, as new strategies may not comply with older standards.
Overall, while the bill aims to facilitate necessary investments in hazard mitigation, the financial structures included may need more flexibility to adapt to the changing nature of environmental threats and the financial realities of businesses operating on working waterfronts.
Issues
The definition and application of 'working waterfront property' in Section 48F(d)(2) includes a gross receipts test that might exclude businesses slightly exceeding the $47,000,000 threshold, potentially affecting essential waterfront operations.
The language in Section 2(b)(1)(C) on inflation adjustments for the dollar and gross receipts limits is unclear, which could lead to misunderstandings and miscalculations for taxpayers interpreting these adjustments.
The limitation on the credit in Section 48F(b)(1) to a maximum of $300,000 per taxpayer might be insufficient for larger mitigation projects, limiting the effectiveness and fairness of the funding allocation.
The aggregation rules in Section 48F(b)(1)(B) and Section 48F(d)(3)(B) could disadvantage certain business entities by mistakenly grouping them, restricting their access to credits or affecting the gross receipts determination.
There are potential complexities and ambiguities in the language regarding the qualifying methods for disaster mitigation in Section 48F(d)(1)(B), which might exclude effective but unrecognized mitigation strategies, thereby hindering innovation.
The use of the 2021 International Code Council International Building Code as a standard for projects placed in service before 2032, outlined in Section 48F(d)(1)(A), may not account for future advancements in building codes, posing compliance issues with newer standards.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
The first section of the bill provides its short title, stating that it can be referred to as the "Working Waterfront Disaster Mitigation Tax Credit Act."
2. Working waterfront disaster mitigation project credit Read Opens in new tab
Summary AI
The proposed section introduces a tax credit for projects aimed at protecting waterfront properties from natural disasters. Taxpayers can receive a credit of 30% on investments for qualifying projects, with certain limits and conditions, like a cap of $300,000 and compliance with specific building codes and hazard mitigation strategies.
Money References
- “(b) Limitations.— “(1) DOLLAR LIMITATION.— “(A) IN GENERAL.—The amount of the credit allowed under this section with respect to any taxpayer shall not exceed $300,000.
- “(B) AGGREGATION RULES.—All taxpayers treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as a single taxpayer for purposes of subparagraph (A). “(C) INFLATION ADJUSTMENT.—In the case of any taxable year beginning after December 31, 2025, the $300,000 dollar amount in subparagraph (A) shall be increased by an amount equal to— “(i) such dollar amount, multiplied by “(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ‘calendar year 2024’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.
- If any amount as increased under the preceding sentence is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.
- — “(A) IN GENERAL.—A trade or business meets the gross receipts test of this paragraph if the average annual gross receipts of such trade or business for the 3-taxable-year period preceding such taxable year does not exceed $47,000,000.
- “(D) INFLATION ADJUSTMENT.—In the case of any taxable year beginning after December 31, 2025, the dollar amount in subparagraph (A) shall be increased by an amount equal to— “(i) such dollar amount, multiplied by “(ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ‘calendar year 2024’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.
- If any amount as increased under the preceding sentence is not a multiple of $1,000,000, such amount shall be rounded to the nearest multiple of $1,000,000.
48F. Working waterfront disaster mitigation project credit Read Opens in new tab
Summary AI
The section provides a tax credit of up to 30 percent of qualified investments in projects designed to reduce or prevent damage to working waterfront properties from natural disasters, with a maximum credit of $300,000 per taxpayer, subject to certain rules for aggregation, inflation adjustments, and a 10-year limitation on use. Eligible projects must comply with specific building codes and include measures like structural elevation and floodproofing to protect against hazards, while eligible properties must be used in water-related businesses that meet a gross receipts test.
Money References
- (b) Limitations.— (1) DOLLAR LIMITATION.
- (A) IN GENERAL.—The amount of the credit allowed under this section with respect to any taxpayer shall not exceed $300,000.
- (B) AGGREGATION RULES.—All taxpayers treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as a single taxpayer for purposes of subparagraph (A). (C) INFLATION ADJUSTMENT.—In the case of any taxable year beginning after December 31, 2025, the $300,000 dollar amount in subparagraph (A) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting “calendar year 2024” for “calendar year 2016” in subparagraph (A)(ii) thereof. If any amount as increased under the preceding sentence is not a multiple of $10,000, such amount shall be rounded to the nearest multiple of $10,000.
- — (A) IN GENERAL.—A trade or business meets the gross receipts test of this paragraph if the average annual gross receipts of such trade or business for the 3-taxable-year period preceding such taxable year does not exceed $47,000,000.
- (D) INFLATION ADJUSTMENT.—In the case of any taxable year beginning after December 31, 2025, the dollar amount in subparagraph (A) shall be increased by an amount equal to— (i) such dollar amount, multiplied by (ii) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting “calendar year 2024” for “calendar year 2016” in subparagraph (A)(ii) thereof.
- If any amount as increased under the preceding sentence is not a multiple of $1,000,000, such amount shall be rounded to the nearest multiple of $1,000,000.