Landrieu Asks IRS, Treasury to Provide Tax Guidance for Oil Spill Claims Payments

June 28, 2010

(Credit: Chris Graythen/Getty Images)

WASHINGTON — In a letter to Treasury Secretary Timothy Geithner and Internal Revenue Service Commissioner Doug Shulman, United States Sen. Mary L. Landrieu, D-La., asked the federal government to provide tax guidance to Gulf Coast individuals and businesses that have received oil spill claims payments from BP.

Sen. Landrieu requested 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
•Whether payments for personal injury claims are taxable.

“As of June 22, 2010-Day 63 of this tragedy-your agencies had yet to issue any guidance to advise recipients of BP payments on how they should treat these payments for federal tax purposes,” Sen. Landrieu wrote. “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. ”

In the letter, Sen. Landrieu asked the agencies to address these issues by the end of next week, so that claims recipients can have accurate financial planning information as soon as possible.

“As oil continues to spew into the Gulf of Mexico, the claims against BP will continue to mount, and the need for even the most basic guidance on how BP payments should be treated for federal income tax purposes will continue to grow,” Sen. Landrieu wrote. “For that reason, I respectfully request a written response to this letter-either in the form of guidance or an explanation as to the timing for forthcoming guidance no later than Friday, July 2, 2010.”

To view the full letter to Secretary Geithner and Commissioner Shulman, please visit:
http://landrieu.senate.gov/mediacenter/upload/10.06.23_Geithner_Letter.pdf

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