A bill introduced by Senator Cindy Hyde-Smith aims to help private forest owners recover from natural disasters.
According to the Senator, one-third of forest land in the United States is held by family landowners who currently have “little recourse for relief following floods, wildfires, and other disasters.”
Hyde-Smith’s bill, ‘The Forest Recovery Act’, would amend the U.S. tax code to establish a special rule for losses of uncut timber following natural disasters. While announcing the bill, Hyde-Smith stated that providing a tax deduction for casualty losses would not only help landowners recover, but also encourage investment in reforesting damaged acres.
“Not allowing these timber interests, many of whom are family-owned small business operations, to recover their losses doesn’t help anyone—not them, the local economy, or the environment,” Hyde-Smith said. “My bill would create an opportunity to make this right.”
Senator Roger Wicker, one of three co-sponsors on the bill, explained that this bill could help many Mississippians.
“Mississippi’s millions of acres of forests are our state’s second largest agricultural product by value but are not eligible for tax relief in case of disaster,” Wicker said. “This proposal would provide landowners much-needed relief in the event of a catastrophe and encourage the return of this land to active production.”
The legislation would adjust current tax law, which restricts casualty loss deductions to losses incurred in federally-declared disaster areas. Even when wildfires or floods do not result in a formal disaster designation, federal crop insurance coverage is unavailable for forest lands, and there are no affordable private insurance products.
“The nation’s family forest owners are grateful for the support of Senator Hyde-Smith in introducing legislation that can help them better care for their forests today and in the future,” said Tom Martin, President and CEO of the American Forest Foundation.
Specifically, the Forest Recovery Act would:
- Modify the tax deduction for casualty losses to establish special rules for losses of uncut timber;
- Establish that basis used for determining the amount of the deduction in cases of uncut timber losses from fire, storm, other casualty, or theft may not be less than the excess of the fair market value of the uncut timber determined immediately before the loss was sustained over the salvage value of the timber;
- Apply the special rule only if (1) the timber was held for the purpose of being cut and sold and (2) the uncut timber subject to the loss is reforested within five years of the loss; and
- Exempt casualty losses from uncut timber from the rule restricting the deduction for personal casualty losses to losses attributable to a federally declared disaster.
A copy of the bill, which has been referred to the Senate Finance Committee, is available here.