Friday, June 25, 2010
Following up on Tuesday's post, $20b Gulf Coast Disaster Payments: Income to Victims, Deductible by BP: Sen. Mary Landrieu (D-LA) on Wednesday sent this letter to the Treasury Department and the IRS seeking public written guidance by July 2 on the tax treatment of BP oil spill claims payments to individuals and businesses:
As of June 22, 2010 -- Day 63 of this tragedy -- your agencies had yet to issue any guidance to advise recipients recipients of BP payments on how they should treat these payments for federal tax purposes. While I share your goal of ensuring that U.S. tax laws are followed and I am aware that this situation has triggered some unprecedented questions of tax policy, this delay in action is unacceptable.
It is my strong belief that every relevant tax question triggered by this disaster cannot nor should not be answered immediately. I also appreciate that your agencies need sufficient time to develop sound tax policies on how these payments should be treated for tax purposes. However, as I write to you today, now is the time for impacted Gulf Coast residents to receive basic guidance on fundamental issues that have been triggered by the disaster such as:
- Whether income replacement payments are taxable;
- Whether property damage payments are taxable; and
- And whether payments for personal injury claims are taxable.