San Bruno victims' aid shouldn't be taxed as income
San Mateo County Times
By Jackie Speier
View the original piece here.
Life often isn't fair and neither, at times, is the federal tax code.
The tragic San Bruno natural gas pipeline explosion killed eight people, subjected others to painful, life-threatening burns over most of their bodies, and forced families to sift through ashes for valuables and cherished belongings. And now, more than two months later, there is a growing concern that PG&E payments made to compensate survivors may, in fact, be subject to federal income tax.
This is one tax levy that must be stopped in its tracks.
During the week after the pipeline fire, San Bruno survivors searched for missing loved ones, called relatives to let them know they were safe and consoled neighbors who were also suffering. The most unfortunate began the process of grieving for those who perished. Survivors spent this traumatic time picking up the pieces of their shattered lives.
In the days and weeks after the explosion, PG&E officials provided immediate financial relief to these San Bruno residents. One resident used $5,000 to secure a monthlong stay for his family in a nearby apartment. Others used PG&E funds to pay for hotel bills and replacement clothing. Still others are holding onto the payments, knowing that expenses will arise in the future.
Disturbingly, federal law basically requires that the San Bruno survivors who received compensation from PG&E pay taxes on what they receive that is above the amount that they pay
to replace lost property, or for other expenses.
Circumstances may differ in individual cases, but the general concept is that taxes are owed on money not used to replace "like-for-like" and that is in excess of what you need for increased living expenses. In various conversations with survivors, town halls in San Bruno and in meetings with local officials, I've learned that virtually none of the survivors knew this was the case. It's possible that some still don't know.
And why should they? It is obvious that this relief is neither income nor an investment. It's simply ludicrous for the money to be taxed like either. It's also ludicrous that a person would have to provide a detailed list of all personal property, for example, to demonstrate that the property was replaced so no tax is owed. What survivor remembers the number of knives, forks and spoons that they owned before a fire? How many could provide visual documentation or receipts to the IRS to verify their recollection when their house and its contents, including receipts, were destroyed by fire?
To relieve these residents, I have introduced the San Bruno Survivors Compensation Fairness Act of 2010 (HR 6428). If passed, this legislation would excuse from taxes all payments made by PG&E to survivors.
The Sept. 9 gas pipeline explosion in San Bruno's Glenview neighborhood affected more than 300 homes. The last thing these residents need is unfair, burdensome taxes on relief they desperately needed. Let's give those who have suffered the time to heal, not a tax bill.
JACKIE SPEIER, D-San Mateo, represents the 12th Congressional District. She wrote this article for this newspaper.