UFA Special Update  - Oct 3, 2008

1. House Passes EVOS Tax Treatment Act in financial bailout package.
The U.S House of Representatives voted this morning to pass a financial bailout package that included language from the Exxon Valdez Tax Treatment Act - one of UFA’s top priority measures for the last three years.  The measure includes income averaging over three years, and one time contribution to retirement accounts, and treatment as fishing income rather than wages or self-employment. The language is pasted below, obtained from the Thomas Library of Congress website at http://thomas.loc.gov/ .

Congratulations to Bruce Schactler, Frank Mullen, Bruce Gabrys, George Mannina, United Cook Inlet Drift Association, Cordova District Fishermen United, The Oiled Fishermen’s Fund, and especially Senators Stevens and Murkowski and their staff for their work to get this done. See bill language pasted below…

The Oiled Fishermen’s Fund still needs donations to help pay for the lobbying effort that got this done. Contributions should be made out to Oiled Fishermen’s Fund and mailed care of UCIDA, 43961 Kalifornsky Beach Rd Ste E, Soldotna, AK 99669.

2. SUNDAY OCTOBER 5 is last day to submit Alaska Voter Registration to vote in the November 4 general election.

If you need to register or update your existing registration, your application must be received or postmarked 30 days before an election (October 5).  If you are not in a location that can postmark your application on a Sunday, you’ll need to mail your completed form by tomorrow, Saturday Oct 4.

Voter registration forms can also be faxed or hand delivered to Division of Elections offices in Juneau, Anchorage, Wasilla, Fairbanks or Nome.

Registration form and information are online Division of Elections Voter Registration home page at:  http://www.elections.alaska.gov/regapp.php

Exxon Valdez Oil Spill Tax Treatment Act language:

H.R.1424

Resolved, That the bill from the House of Representatives (H.R. 1424) entitled `An Act to amend section 712 of the Employee Retirement Income Security Act of 1974, section 2705 of... (Engrossed Amendment as Agreed to by Senate)

(the following is on page 301…)

SEC. 504. INCOME AVERAGING FOR AMOUNTS RECEIVED IN CONNECTION WITH THE EXXON VALDEZ LITIGATION.

(a) Income Averaging of Amounts Received From the Exxon Valdez Litigation- For purposes of section 1301 of the Internal Revenue Code of 1986--

(1) any qualified taxpayer who receives any qualified settlement income in any taxable year shall be treated as engaged in a fishing business (determined without regard to the commercial nature of the business), and

(2) such qualified settlement income shall be treated as income attributable to such a fishing business for such taxable year.

(b) Contributions of Amounts Received to Retirement Accounts-

(1) IN GENERAL- Any qualified taxpayer who receives qualified settlement income during the taxable year may, at any time before the end of the taxable year in which such income was received, make one or more contributions to an eligible retirement plan of which such qualified taxpayer is a beneficiary in an aggregate amount not to exceed the lesser of--

(A) $100,000 (reduced by the amount of qualified settlement income contributed to an eligible retirement plan in prior taxable years pursuant to this subsection), or

(B) the amount of qualified settlement income received by the individual during the taxable year.

(2) TIME WHEN CONTRIBUTIONS DEEMED MADE- For purposes of paragraph (1), a qualified taxpayer shall be deemed to have made a contribution to an eligible retirement plan on the last day of the taxable year in which such income is received if the contribution is made on account of such taxable year and is made not later than the time prescribed by law for filing the return for such taxable year (not including extensions thereof).

(3) TREATMENT OF CONTRIBUTIONS TO ELIGIBLE RETIREMENT PLANS- For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to paragraph (1) with respect to qualified settlement income, then--

(A) except as provided in paragraph (4)--
(i) to the extent of such contribution, the qualified settlement income shall not be included in taxable income, and
(ii) for purposes of section 72 of such Code, such contribution shall not be considered to be investment in the contract,

(B) the qualified taxpayer shall, to the extent of the amount of the contribution, be treated--
(i) as having received the qualified settlement income--
(I) in the case of a contribution to an individual retirement plan (as defined under section 7701(a)(37) of such Code), in a distribution described in section 408(d)(3) of such Code, and
(II) in the case of any other eligible retirement plan, in an eligible rollover distribution (as defined under section 402(f)(2) of such Code), and
(ii) as having transferred the amount to the eligible retirement plan in a direct trustee to trustee transfer within 60 days of the distribution,

(C) section 408(d)(3)(B) of the Internal Revenue Code of 1986 shall not apply with respect to amounts treated as a rollover under this paragraph, and

(D) section 408A(c)(3)(B) of the Internal Revenue Code of 1986 shall not apply with respect to amounts contributed to a Roth IRA (as defined under section 408A(b) of such Code) or a designated Roth contribution to an applicable retirement plan (within the meaning of section 402A of such Code) under this paragraph.

(4) SPECIAL RULE FOR ROTH IRAS AND ROTH 401(k)S- For purposes of the Internal Revenue Code of 1986, if a contribution is made pursuant to paragraph (1) with respect to qualified settlement income to a Roth IRA (as defined under section 408A(b) of such Code) or as a designated Roth contribution to an applicable retirement plan (within the meaning of section 402A of such Code), then--

(A) the qualified settlement income shall be includible in taxable income, and
(B) for purposes of section 72 of such Code, such contribution shall be considered to be investment in the contract.

(5) ELIGIBLE RETIREMENT PLAN- For purpose of this subsection, the term `eligible retirement plan' has the meaning given such term under section 402(c)(8)(B) of the Internal Revenue Code of 1986.

(c) Treatment of Qualified Settlement Income Under Employment Taxes-

(1) SECA- For purposes of chapter 2 of the Internal Revenue Code of 1986 and section 211 of the Social Security Act, no portion of qualified settlement income received by a qualified taxpayer shall be treated as self-employment income.

(2) FICA- For purposes of chapter 21 of the Internal Revenue Code of 1986 and section 209 of the Social Security Act, no portion of qualified settlement income received by a qualified taxpayer shall be treated as wages.

(d) Qualified Taxpayer- For purposes of this section, the term `qualified taxpayer' means--

(1) any individual who is a plaintiff in the civil action In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D. Alaska); or
(2) any individual who is a beneficiary of the estate of such a plaintiff who--

(A) acquired the right to receive qualified settlement income from that plaintiff; and
(B) was the spouse or an immediate relative of that plaintiff.

(e) Qualified Settlement Income- For purposes of this section, the term `qualified settlement income' means any interest and punitive damage awards which are--

(1) otherwise includible in taxable income, and
(2) received (whether as lump sums or periodic payments) in connection with the civil action In re Exxon Valdez, No. 89-095-CV (HRH) (Consolidated) (D. Alaska) (whether pre- or post-judgment and whether related to a settlement or judgment).