Emanuel, Obama Announce Plan for Fast-Track Tax Refunds

WASHINGTON, D.C.—In a letter to Treasury Secretary John Snow, U.S. Rep. Rahm Emanuel (IL) and U.S. Senator Barack Obama (IL) called on the Treasury Department to fast-track tax refunds to victims of Hurricane Katrina.  Emanuel will introduce legislation in the U.S. House of Representatives to direct the Department of Treasury to make families eligible to receive their refunds now rather than later.  Obama will introduce companion legislation in the U.S. Senate.

“Thousands of working families have lost their homes and belongings.  Many have been left financially ruined but we have a chance now to make sure they can start to rebuild their lives,” said Emanuel.  “There is precedent for fast-tracking tax refunds during times of crisis.  In wake of the tragic events of September 11, 2001, Congress fast-tracked Child Tax Credit refunds to help the people of New York rebuild their lives.  While the situations were very different, the devastation is very much the same.  We cannot undo the damage wrought by Hurricane Katrina, but we can begin to restore lives.”

This legislation directs the Internal Revenue Service to use 2004 income tax returns to estimate a taxpayer’s projected benefit for the 2005 tax year, and to immediately accelerate the Earned Income Tax Credit, Child Tax Credit, and applicable education incentives.  This move will effectively advance each Katrina victim the refunds they has earned. 

“For families living paycheck to paycheck, a tax refund isn’t just a welcome surprise at the end of the year but is money they count on to make ends meet,” said Obama. “The families displaced by Hurricane Katrina need their refunds now more than ever, and their government has an obligation to do everything it can to help them get back on their feet.”

On April, 15, 2006, any taxpayer who benefited from this program can resolve any discrepancy in the money they received this year and the benefits he actually earned.  If the taxpayer owes money, it simply rolls over to the 2006 tax year. 

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September 14, 2005

The Honorable John W. Snow
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220

Dear Secretary Snow,

We commend the Treasury Department and Internal Revenue Service for granting certain tax relief to victims of Hurricane Katrina.  While the measures taken to date are helpful, we can and should do more.  As we consider tax incentives for businesses to recover, it is time we also discuss tax incentives for families.  Both are equally important.

In the next few days, we will introduce the “Hurricane Katrina Accelerated Tax Refund Act.”  This bill would immediately accelerate the Earned Income Tax Credit, the Child Tax Credit, and applicable education incentives.  By taking these steps, we can deliver resources on a fast-track basis to families that have worked hard, paid taxes and earned these tax benefits, all the while stimulating local economies.  These Americans who have lost so much should receive their refunds now rather than later.  There is precedent for fast-tracking tax refunds during times of crisis.  As you know, in the wake of the tragic events of September 11, 2001, Congress passed legislation to fast-track Child Tax Credit refunds.

Our legislation directs the IRS to issue regulations and to take all necessary steps to implement this accelerated tax benefits program.   The IRS can use 2004 income tax returns as proxies to estimate tax benefits earned for the 2005 tax year.  Any actual change in benefits earned will be resolved after Hurricane Katrina victims file tax returns on April 15, 2006.  Monies found to be owed by taxpayers can be rolled over to 2006 and future tax years as appropriate.  Hurricane Katrina victims should be able to retrieve checks at any IRS Tax Assistance Center, local disaster recovery centers run by FEMA, or other convenient and accessible location. 

It is vitally important that we take these steps now.  Thousands of working families have lost their homes and belongings.  Many have been left destitute.  The federal government can respond by fast-tracking the benefits that Katrina victims have earned.  We look forward to working with you to ensure that the Hurricane Katrina Accelerated Tax Refund program is successful.

Sincerely,

Representative Rahm Emanuel                                                   
Senator Barack Obama