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Groups Urge Treasury Department To Offer Guidance On COVID Relief Utility Assistance Taxation

September 20, 2021

by Paul Ciampoli
APPA News Director
September 20, 2021

The American Public Power Association (APPA) has joined with 16 other organizations in asking the Department of Treasury to issue guidance clarifying that residential utility assistance funded through the Coronavirus State and Local Fiscal Recovery Fund (CSLFRF) is not includable in individual income.

Treasury has issued similar guidance relating the Emergency Rental Assistance Program but has yet to do so for CSLFRF.

In a Sept. 15, 2021, letter organized by APPA and sent to Treasury’s office of the Undersecretary for Domestic Finance, the groups said they were writing in strong support of allowing utility assistance to households or populations facing negative economic impacts due to COVID-19 as an eligible use of CSLFRF as provided under Treasury’s Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule.

“There is a question as to whether such assistance to residential households and other non-business utility customers is includable in income,” APPA and the other groups noted. “As a result, households receiving such assistance must consider themselves at risk of additional tax liability and/or a decrease in income-based benefits, such as the Earned Income Tax Credit.”

The groups said that this question is also of concern to agencies, departments, and utilities implementing such assistance programs because they would be required to report this assistance as income to the Internal Revenue Service.

While the Feb. 1, 2022 deadline for filing such reports “seems distant, program managers must start making decisions on meeting such requirements now,” the letter pointed out.

“Finally, this needlessly raises complicated tax administration issues, such as the allocation of the value of assistance to multi-family households and the issuance of information returns to customers without, or without a known, Social Security or taxpayer information number,” the groups went on to say.

The groups believe that the Internal Revenue Code already indicates that disaster assistance, such as that provided under CSLFRF, is not includable in income. However, guidance mirroring that provided for the Emergency Rental Assistance Program at: https://www.irs.gov/newsroom/emergencyrentalassistancefrequentlyaskedquestions would provide needed assurances to program beneficiaries and program managers, the letter said.

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