As a certified public accountant, I am writing this letter to alert the victims of Sandy as to how current tax law with respect to this disaster will adversely affect them.
Since Sandy is a federally declared disaster, its destruction to real and personal property qualifies for a "casualty loss" deduction for individuals under the tax code. However, the calculation of the amount of the casualty loss is determined, in part, by reducing such losses by 10 percent of a taxpayer's adjusted gross income. This 10 percent reduction of the casualty loss may eliminate or substantially reduce a taxpayer's tax deduction so that the cost of this devastation provides no tax relief.
Congress once recognized that the 10 percent reduction would render casualty-loss tax relief useless. As a result of Hurricane Katrina and other Midwestern storm disasters, Congress temporarily amended the rules to waive the 10 percent reduction for tax years 2008 through 2010.
Now, the residents of New Jersey need their representatives in Congress to get similar legislation enacted.
I have contacted the offices of Sens. Robert Menendez and Frank Lautenberg, both D-N.J., and their legislative staffs have told me that they are proposing such legislation. However, the citizens of New Jersey don't need proposed legislation - we need them to get legislation enacted.
New Jersey already gets fewer federally collected tax dollars returned than most other states. This is a shameful representation of New Jersey constituents.
Please contact Menendez and Lautenberg and your representative in the House and let them know that we expect them to get tax legislation passed to provide us the same relief given the victims of Hurricane Katrina and the Midwestern storms.
LOUIS F. CASTELLI