H.R. 1659 - Stop Taxing Death and Disability Act

115TH CONGRESS
1ST SESSION

H.R. 1659

To amend the Internal Revenue Code of 1986 and the Higher Education Act
of 1965 to provide an exclusion from income for student loan forgiveness
for students who have died or become disabled.

IN THE HOUSE OF REPRESENTATIVES

MARCH 21, 2017

Mr. ROSKAM (for himself, Mr.KIND, Mr. COSTELLO of Pennsylvania, Ms. PINGREE,
Mr. REICHERT, Mr.  ASCRELL, Mr. RENACCI, Mr. SEAN PATRICK MALONEY of
New York, and Ms. BONAMICI) introduced the following bill; which was referred
to the Committee on Ways and Means, and in addition to the Committee on
Education and the Workforce, for a period to be subsequently determined
by the Speaker, in each case for consideration of such provisions as
fall within the jurisdiction of the committee concerned

A BILL

To amend the Internal Revenue Code of 1986 and the High-er Education Act of 1965 to provide an exclusion from income for student loan forgiveness for students who have died or become disabled.

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 ‘‘Stop Taxing Death and Disability Act’’.

SEC. 2. TREATMENT OF STUDENT LOANS DISCHARGED ON ACCOUNT OF DEATH OR DISABILITY.

(a) AMENDMENTS TO INTERNAL REVENUE CODE OF 1986. —

(1) IN GENERAL. — Section 108(f) of the Internal Revenue Code of 1986 is amended by adding at the end the following new paragraph:

‘‘(5) DISCHARGES ON ACCOUNT OF DEATH OR DISABILITY. —

‘‘(A) IN GENERAL. — In the case of an individual, gross income does not include any amount which (but for this subsection) would be includible in gross income by reasons of the discharge (in whole or in part) of any loan described in subparagraph (B) if such discharge was —

‘‘(i) pursuant to subsection (a) or (d) of section 437 of the Higher Education Act of 1965 or the parallel benefit under part D of title IV of such Act (relating to the repayment of loan liability),

‘‘(ii) pursuant to section 464(c)(1)(F) of such Act, or

‘‘(iii) otherwise discharged on account of the death or total and permanent disability of the student.

‘‘(B) LOANS DESCRIBED. — A loan is described in this subparagraph if such loan is —

‘‘(i) a student loan (as defined in paragraph (2)), or

‘‘(ii) a private education loan (as defined in section 140(7) of the Truth in Lending Act (15 U.S.C. 1650(7))).’’.

(2) EFFECTIVE DATE. — The amendment made by this section shall apply to discharges of loans before, on, or after the date of the enactment of this act

(b) AMENDMENT TO THE HIGHER EDUCATION ACT OF 1965. — Section 437(d) of the Higher Education Act of 1965 (20 U.S.C. 1087(d)) is amended by inserting ‘‘or becomes permanently and totally disabled (as determined in accordance with regulations of the Secretary), or if the student is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, has lasted for a continuous period of not less than 60 months, or can be expected to last for a continuous period of not less than 60 months’’ after ‘‘dies’’.