Disaster Zone Energy Affordability and Investment Act
Summary
The Disaster Zone Energy Affordability and Investment Act aims to amend the Internal Revenue Code of 1986, allowing businesses affected by federally declared disasters to transfer a portion of their general business credit carryforwards. This applies to businesses operating in qualified disaster areas after December 31, 2023. The goal is to incentivize investment and economic recovery in these regions by providing tax relief.
Expected Effects
The Act will enable businesses in disaster zones to utilize tax credits more effectively, potentially spurring reinvestment and job creation. It modifies existing tax code Section 6418(f)(1)(A) to include applicable general business credit carryforwards. This could lead to increased economic activity and resilience in areas impacted by major disasters.
Potential Benefits
- Provides financial relief to businesses operating in disaster areas.
- Incentivizes reinvestment and economic activity in affected regions.
- Allows for the transfer of certain business credit carryforwards, improving cash flow for businesses.
- Specifically targets areas affected by federally declared disasters or state-declared disasters after 2023.
- Simplifies the process for utilizing tax credits through a special rule regarding registration.
Most Benefited Areas:
Potential Disadvantages
- The benefits are limited to specific types of credits and disaster areas, potentially excluding some businesses in need.
- The complexity of the tax code may create administrative burdens for businesses trying to utilize these provisions.
- The effectiveness depends on the ability of businesses to navigate the application process and meet eligibility requirements.
- Potential for unintended consequences or loopholes that could be exploited.
- The Act's impact may be limited by the overall economic conditions in the disaster area.
Constitutional Alignment
The bill aligns with the Constitution's general welfare clause (Preamble) by aiming to promote economic recovery in disaster-stricken areas. Congress has the power to lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States (Article I, Section 8, Clause 1). The bill falls under this power as it modifies the tax code to provide relief to businesses affected by disasters.
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).