Just wonderful - our government
Live on the Gulf Coast? Check!
Business affected by Oil Spill? Check!
Get reimbursed by BP? Check!
Hello Internal Revenue Service -- yipieeee!!!
From
Alabama Live/Associated Press:
Updated: IRS says it wants its share of BP payments received by oil spill victims
The Internal Revenue Service says oil spill victims who receive BP payments for lost wages will have to pay up come tax time.
Under current law, BP payments for lost wages are taxable -- just like the wages would have been, the IRS said in tax guidance issued Friday. Payments for physical injuries or property loss, however, are generally tax free. Payments for emotional distress? Taxable, though medical expenses related to the emotional distress are deductible.
BP officials have agreed to create a $20 billion fund for spill victims, as well as a $100 million fund to support displaced oil rig workers.
The IRS issued the guidance today to help spill victims sort through the law's complexities. The agency has posted tax information for oil spill victims on its website and plans to hold forums in seven Gulf Coast cities on July 17 to help victims with tax troubles or questions.
"As residents of the region cope with the evolving situation, I want to assure them that the IRS will be doing everything it can to provide tax help to those who need it," IRS Commissioner Doug Shulman said. "We encourage anyone who has an issue with the IRS to contact us and explain their hardship, and we will work with them to find a solution."
This is just a naked grab of power. If I was a fisherman and made $10K (pulling some numbers out of my... hat...) and I had $2,500 mortgage payments on my boat and had to spend another $2,500 for fuel, gas, employees, insurance, etc... I (or my company) would be making $5K profit and would be paying the IRS their share of the $5K.
If BP was to compensate me fully for my losses, it would be $2,500 for the boat mortgage, maybe another $1,000 for insurance and an employee to maintain the boat so figure out of pocket costs for not operating would be $3,500 plus my lost $5K profits.
I can see paying tax on the $5K but I (or my company) should still be able to deduct standard operating costs. To hit people while they are down like this is unconscionable; especially since it is a branch of the government that will be administering the $20BN payoff fund from BP.
How people can wish for more government involvement in their lives is beyond me...
Posted by DaveH at June 25, 2010 8:47 PM