Homeowner Tax Fairness Act

Homeowner Tax Fairness Act - Amends the Internal Revenue Code to: (1) extend through 2015 the exclusion from gross income of income attributable to the discharge of indebtedness on a principal residence, (2) extend through 2014 the tax deduction for mortgage insurance premiums, (3) exclude from gross income any National Mortgage Settlement amount, and (4) deny a tax deduction for any National Mortgage Settlement amount paid in exchange for a full release of the potential civil claims of the United States under the Servicemembers Civil Relief Act.

Defines "National Mortgage Settlement amount" as any amount received pursuant to the settlement in a legal action against Bank of America Corporation filed in U.S. District Court on March 12, 2012, which is: (1) a payment for transitional assistance; (2) a payment from the Borrower Payment Fund under the National Mortgage Settlement to a borrower whose home was finally sold or taken in foreclosure after December 31, 2007, and before January 1, 2012; or (3) a payment received as a result of a foreclosure or excess charge of interest that the Department of Justice (DOJ) has determined was not in compliance with the Servicemembers Civil Relief Act.

[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 4290 Introduced in House (IH)]

112th CONGRESS
  2d Session
                                H. R. 4290

    To amend the Internal Revenue Code of 1986 to extend the income 
exclusion for discharge of qualified principal residence indebtedness, 
   to provide exclusions from income for certain payments under the 
         National Mortgage Settlement, and for other purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 28, 2012

Mr. McDermott (for himself, Mr. Larson of Connecticut, Ms. Berkley, Mr. 
   Levin, Mr. Rangel, Mr. Stark, Mr. Lewis of Georgia, Mr. Neal, Mr. 
 Becerra, Mr. Doggett, Mr. Thompson of California, Mr. Blumenauer, Mr. 
  Kind, Mr. Pascrell, and Mr. Crowley) introduced the following bill; 
         which was referred to the Committee on Ways and Means

_______________________________________________________________________

                                 A BILL


 
    To amend the Internal Revenue Code of 1986 to extend the income 
exclusion for discharge of qualified principal residence indebtedness, 
   to provide exclusions from income for certain payments under the 
         National Mortgage Settlement, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Homeowner Tax Fairness Act''.

SEC. 2. EXTENSION OF INCOME EXCLUSION FOR DISCHARGE OF QUALIFIED 
              PRINCIPAL RESIDENCE INDEBTEDNESS.

    (a) In General.--Subparagraph (E) of section 108(a)(1) of the 
Internal Revenue Code of 1986 is amended by striking ``January 1, 
2013'' and inserting ``January 1, 2016''.
    (b) Application to Certain Agreements.--Subparagraph (E) of section 
108(a)(1) of such Code, as amended by subsection (a), is amended by 
inserting before the period the following: ``, or which is discharged 
after such date pursuant to an agreement entered into before such date 
under the programs created pursuant to, or using funds authorized by 
the Emergency Economic Stabilization Act of 2008''.
    (c) Effective Date.--
            (1) Subsection (a).--The amendment made by subsection (a) 
        shall apply to discharges in taxable years beginning after 
        December 31, 2012.
            (2) Subsection (b).--The amendment made by subsection (b) 
        shall take effect on the date of the enactment of this Act.

SEC. 3. EXTENSION OF DEDUCTION FOR MORTGAGE INSURANCE PREMIUMS.

    (a) In General.--Subclause (I) of section 163(h)(3)(E)(i) of the 
Internal Revenue Code of 1986 is amended by striking ``December 31, 
2011'' and inserting ``December 31, 2014''.
    (b) Effective Date.--The amendment made by this section shall apply 
to amounts paid or accrued after December 31, 2011.

SEC. 4. EXCLUSIONS RELATING TO NATIONAL MORTGAGE SETTLEMENT PAYMENTS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 (relating to items specifically excluded 
from gross income) is amended by inserting after section 139D the 
following new section:

``SEC. 139E. NATIONAL MORTGAGE SETTLEMENT.

    ``(a) General Rule.--In the case of an individual, gross income 
shall not include any National Mortgage Settlement amount.
    ``(b) National Mortgage Settlement Amount Defined.--For purposes of 
subsection (a), the term `National Mortgage Settlement amount' means, 
with respect to any amount received under the National Mortgage 
Settlement, an amount which is--
            ``(1) a payment for transitional assistance,
            ``(2) a payment from the Borrower Payment Fund under the 
        National Mortgage Settlement to a borrower whose home was 
        finally sold or taken in foreclosure after December 31, 2007, 
        and before January 1, 2012, or
            ``(3) a payment received as a result of a foreclosure or 
        excess charge of interest that the United States Department of 
        Justice has determined was not in compliance with the 
        Servicemembers Civil Relief Act.
    ``(c) Disregard of Refund of Excess Mortgage Interest and Related 
Damages.--In the case of an individual, the amount of interest refunded 
and damages paid under the National Mortgage Settlement for excess 
charges of mortgage interest described in subsection (b)(3)--
            ``(1) shall be disregarded for purposes of this chapter, 
        and
            ``(2) no adjustment of the deduction allowable under 
        section 163(h) shall be made as a result of such refund.
    ``(d) National Mortgage Settlement.--For purposes of this section, 
the term `National Mortgage Settlement' means any consent agreement 
entered into in settlement of the action entitled `The United States of 
America, et al. against Bank of America Corporation, et al.', filed in 
the United States District Court for the District of Columbia on March 
12, 2012 (case numbered 1:12-cv-00361-RMC).''.
    (b) Denial of Business Deduction for Certain Payments.--Section 162 
of such Code is amended by redesignating subsection (q) as subsection 
(r) and by inserting after subsection (p) the following new subsection:
    ``(q) National Mortgage Settlement.--
            ``(1) In general.--No deduction shall be allowed under this 
        chapter for any National Mortgage Settlement amount that was 
        paid in exchange for a full release of the United States' 
        potential civil claims under the Servicemembers Civil Relief 
        Act.
            ``(2) National mortgage settlement amount.--The term 
        `National Mortgage Settlement amount' has the meaning given 
        such term by section 139E.''.
    (c) Clerical Amendment.--The table of sections for such part III is 
amended by inserting after the item relating to section 139D the 
following new item:

``Sec. 139E. National Mortgage Settlement.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years ending after March 12, 2012.
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