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House passes bill giving tax relief to terrorism victims

WASHINGTON -- The House voted Thursday to give families of terror victims tax breaks normally reserved for casualties in war zones. The Internal Revenue Service announced several tax relief measures.

House Republicans also said they were working on a broader economic stimulus package that included a capital gains tax cut.

''The most objective counterterrorism weapon we have in the long run is that there is no long-term setback to our economy, so that we can continue to grow and be strong,'' said Rep. Bill Thomas, R-Calif., chairman of the House Ways and Means Committee.

The victims' relief bill passed the House on a 418-0 vote. It was expected to sail through the Senate, although the timing was uncertain.

The measure would forgive 2001 income taxes for all victims of the terrorist attacks and effectively cut in half any estate tax. It would make federal disaster benefits tax-free and ensure that no tax applies to payments from airlines to families of passengers killed in the four crashes.

Such tax breaks now apply only when military personnel and civilian government employees are killed in foreign combat zones. Until Tuesday's attacks, there had never been a need for similar laws for incidents inside the United States.

''The very least that must be done is give their families all of the benefits we have offered to families of those killed in war zones,'' said Rep. Charles Rangel of New York, ranking Democrat on the Ways and Means Committee.

There was no immediate official estimate of the bill's cost to the government. Thomas put it at ''perhaps tens of millions'' of dollars.

Later Thursday, the IRS announced that taxpayers could get several kinds of relief stemming from the attacks in New York, at the Pentagon in Arlington County, Va., and the plane crash in rural Pennsylvania. Some taxpayers could get relief even though they live outside federally declared disaster areas, such as someone who works in the disaster area or has tax records maintained there.

Taxpayers who believe they are entitled to this relief should write ''Sept. 11, 2001 Terrorist Attack'' in red ink on their returns or other documents submitted to the IRS.

The IRS relief includes:

-Postponement of Monday's individual estimated tax payment deadline to Jan. 15, when their final 2001 payment is due.

-Delay of corporate tax payments that had been due after Sept. 10, until Jan. 15.

-Taxpayers with an extension that runs out between Sept. 11 and Nov. 30 will have another 120 days to file their return. Those with an original tax filing deadline between those dates will have an additional six months plus 120 days to file.

-Levies, seizures and other enforcement activities will be suspended for six months for affected taxpayers.

-Businesses that are unable to make scheduled excise or employment tax deposits immediately will not be subject to penalties if they make those deposits by Nov. 15, 2001.

The Justice Department was making it easier for families of police, firefighters and emergency workers killed in the attacks to apply for federal benefits. About $150,000 is available for each worker killed.

House Republicans also announced plans to move as early as next week on an economic stimulus plan focused on cuts in the capital gains tax on investments, and business tax incentives.

Democrats reacted with caution. Capital gains tax cuts have caused deep partisan divisions in the past, with many Democrats contending such tax breaks favor the wealthy.

The House also voted 413-0 Thursday to expedite payments of $150,000 to $180,000 to families of police, firefighters and other public safety officers who died or suffered catastrophic injury while responding to the attacks. The bill would speed up a process that frequently takes months.

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On the Net:

Information on the bills, H.R. 2884 and H.R. 2882, can be found at http://thomas.loc.gov

Internal Revenue Service: http://www.irs.gov

Justice Department: http://www.usdoj.gov


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