Oil Spill Legal News – Update No. 6, June 28, 2010
On Friday, June 25, 2010, the Internal Revenue Service released guidance (in a question-and-answer format) to individuals and businesses affected by the oil spill in the Gulf of Mexico and announced that a special Gulf Coast Assistance Day will be held in multiple cities on Saturday, July 17, 2010.
|TYPE OF CLAIM||TAX TREATMENT|
- Property Damage
- Property Destruction
|Non-taxable (unless payment exceeds property's basis)|
The guidance provided by the IRS is directed toward the recipients of certain payments made by BP and indicates how the recipients should treat such payments for tax purposes. Specifically, the IRS guidance provides whether payments received for the following types of claims are taxable:
More detailed guidance can be found by clicking on this link to the IRS website where the actual guidance released by the IRS is located.
In addition to releasing guidance, the IRS announced that a special Gulf Coast Assistance Day will be held on Saturday, July 17, 2010, in the following states and cities:
- Alabama: Mobile
- Florida: Panama City and Pensacola
- Louisiana: New Orleans, Houma, and Baton Rouge
- Mississippi: Gulfport
The IRS has indicated that taxpayers and tax preparers will be able to work directly with IRS employees at these events to resolve tax issues, including:
specific topics related to the oil spill;
postponement of collection actions and acceleration of levy releases in certain hardship cases; and arranging some flexibility for previously compliant individuals with respect to missed payments on installment agreements and offers.
WE ARE REQUIRED BY IRS CIRCULAR 230 TO INFORM YOU THAT THE FOREGOING DISCUSSION WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, NOR RELIED UPON, BY ANY TAXPAYER FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED UNDER FEDERAL TAX LAW. THE ADVICE WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED IN THE DISCUSSION. EACH TAXPAYER SHOULD SEEK ADVICE BASED ON ITS PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.
The opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations. As always, readers should consult a qualified attorney for specific legal guidance.