Jan. 22—A bill moving through the state Legislature that seeks to bring tax relief to wildfire victims and related settlement payments cleared another hurdle on Thursday.
The bill, AB 1249, was initially introduced by Assemblyman James Gallagher, R-Yuba City. In the legislation, Gallagher is looking to allow wildfire victims to be exempt from paying state taxes based on settlement payments made out of Pacific Gas and Electric Company's Fire Victim Trust.
On Thursday, AB 1249 was passed by the Assembly's Appropriations Committee. It is expected to move to the Assembly floor for a vote next week.
"Victims deserve to receive the maximum amount of compensation possible from PG&E, especially in light of recent reports that the trust might not be able to pay victims the full settlement amounts they were originally promised," Gallagher said in a statement. "More needs to be done, but the least we can do is make these payments tax free."
According to the Fire Victim Trust website, the trust will "evaluate, administer, process and resolve eligible claims arising from" the Butte fire in 2015, the North Bay fires of 2017, and the 2018 Camp fire.
Gallagher said the purpose of AB 1249 is to clarify California's tax code to allow all types of filers to be excluded from paying state taxes on advance settlements paid out of the Fire Victim Trust.
The bill is co-authored by Sen. Jim Nielsen, R-Tehama; Sen. Bill Dodd, D-Napa; Sen. Brian Dahle, R-Bieber; Assemblyman Frank Bigelow, R-Madera; Assemblywoman Megan Dahle, R-Bieber; and Assemblymember Marc Levine, D-San Rafael.
On Friday, U.S. Congressman Doug LaMalfa, R-Calif., along with a bipartisan group of lawmakers, said a letter was sent to Internal Revenue Service Commissioner Charles Rettig to expedite and release tax guidance to help wildfire victims understand the taxability of their claims from the Fire Victim Trust.
In a statement, LaMalfa said he and Fire Victim Trust Trustee Judge John K. Trotter spoke with the IRS numerous times "to get them to focus on issuing clarifying guidance." LaMalfa said the letter sent to the IRS was part of an effort to push the federal agency to "expedite verbal confirmation that much of the payments made to victims wouldn't be taxable under federal law."
"It is unfair to ask fire victims to comprehend a complex tax code while dealing with the emotional turmoil in the aftermath of a wildfire. These survivors should be focusing on rebuilding their homes, businesses, and towns," LaMalfa said. "I urge the IRS to alleviate some of these hardships by quickly releasing guidance to help victims navigate this difficult process. These victims are currently in a legal gray area and the IRS has indicated that much of the settlement funds shouldn't be taxed. We've been waiting for months for final guidance and it needs to be provided immediately. I'm happy that bipartisan pressure is mounting on the IRS to give firm answers to victims."
Congressman John Garamendi, D-Calif, who was also part of the letter sent to the IRS, made a similar statement.
"Wildfire victims who are working to rebuild their homes and their lives should not be burdened by an unclear tax system," Garamendi said. "We are asking the IRS to remove the bureaucratic red tape and make it clear to wildfire victims how they can use their credit from the Fire Victim Trust to rebuild and replace what they lost."
Other legislators who were part of the letter include U.S. Congressman Mike Thompson, D-Calif.; U.S. Sen. Dianne Feinstein, D-Calif.; U.S. Sen. Alex Padilla, D-Calif.; U.S. Congressman Tom McClintock, R-Calif.; and U.S. Congressman Jared Huffman, D-Calif.
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