Tax Exemption for Disaster Relief

• Pursuant to the act, if an individual receives payment from any entity that is made for the basis of reimbursing the individual for a disaster expense, the expense is not treated as taxable income. In addition, according to the law, if the payment was from an employer, the payment is not treated as taxable income and is not subject to employment taxes or withholding. In order to receive the tax exemption, the payments must be to a specially defined person connected to the disaster. In addition, the payment must be directly related and arising from the disaster.
  
  

Death Benefits

• The act also indicates that there are particular types of death benefits that are tax-exempt. For example, the act provides that death benefits paid by an employer relating to the attacks of Sept. 11 or anthrax attacks of 2001-2002 are not subject to treatment as taxable income. Furthermore, the act can be taken advantage of by survivors of individuals who were killed during 9/11 or in the 2001-2002 anthrax attacks, military personnel killed in combat or government personnel who are killed abroad because of terrorism.
  
  

Charitable Organizations

• The act also allows for relief from the administrative requirements of charities who work with disaster relief efforts. Specifically, before giving out money, charitable organizations must assess and create a record of the exact needs of the people or groups that will benefit from the money. However, because of the high number of donations to charities after the 9/11 attacks and the chaos that followed, the disbursement of the funds was protracted. In an effort to prevent disbursement delays, charitable organizations are now allowed to disburse the funds for disaster relief efforts so long as the funds are given out in a uniform, consistent manner and in good faith.
  
  

Employer Foundations

• The act also indicates that private-employer based, employer-created private foundations can provide relief to its employees affected by the disaster. However, the law contains certain limitations, including, but not limited to, a requirement that disbursements are made on objective criteria and that no individual can receive a private inappropriate benefit.
  
  

Estate Tax

• The act provides for estate tax relief to victims of terrorism and their families. Specifically, estates are allowed to use a reduced tax rate table in order to determine when the estate must be taxed. Generally, in 2001, an estate of up to $675,000. was exempt from federal estate tax. However, pursuant to the act, the estate tax does not apply until a taxable estate is worth more than $10,100,000.