The legislation, to be introduced in the Senate this week, would allow full tax deductions for cleanup expenses, give damaged small businesses a tax credit for keeping employees and waive fees for early withdrawal from retirement plans.
The bill also would temporarily relax some mortgage rules and would grant states the authority and funding to issue a slew of tax credits for individuals and businesses affected by the storm.
"When recovering from a hammer blow like Sandy, every bit helps," Schumer (D-N.Y.) said at a news conference in his Manhattan office, where he was joined by Menendez (D-N.J.) and two Sandy victims. "These changes to the tax law are a commonsense and simple way to help disaster victims," Schumer said.
Besides the thousands of residents who lost all or part of their homes to Sandy, many small businesses in the area made no revenue in the weeks after the storm because people were unable to travel to or communicate with their offices, even if the offices were undamaged.
"It was very, very traumatic to stay, which we did. Even though we have flood insurance, part of the damage isn't covered," said Ruth Banschick, a lawyer from Long Beach who was at the news conference. She wasn't able to work for weeks after the storm and at the same time, she has been hosting several friends who lost their home. Banschick said that receiving more tax exemptions such as those proposed would help on several levels.
Schumer called businesses that kept their employees while unable to provide services "heroic" and said they must be rewarded with tax credits.
The senators said that getting the legislation passed in the shadow of the "fiscal cliff" debate will be challenging, but they expect other lawmakers to support them. Schumer said the bill will be introduced separately from the year-end tax debate but will share its deadline.
"We'll do it before Dec. 31 no matter what happens with fiscal cliff," Schumer said.
Menendez and Schumer both praised the proposed $60.4-billion federal aid package, saying that while it fell short of the total needed, it was more than the battered East Coast states had hoped for.
"Half a loaf is better than one, and three-quarters of a loaf is better than half," Schumer said. "Do we need more? Yes."
SANDY TAX-RELIEF BILL
Exemption for housing displaced individuals: Allows those providing free housing for at least 60 consecutive days to persons displaced by Sandy to claim personal exemptions for those persons, up to $500 per person and a maximum of four exemptions.
Increased depreciation allowance: Allows businesses in the disaster zone to use bonus depreciation for capital expenditures associated with constructing commercial properties and residential rental properties.
Relaxed retirement-plan distribution rules: Waives the 10-percent penalty tax for Sandy victims that otherwise would apply on an early withdrawal from a retirement plan.
Source: Sen. Charles Schumer's office